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Gold prices in India struggled near one-month lows amid global weakness in the precious metal. Gold MCX futures were at 50,369 per 10 gram while silver contracts rose 0.2% to 55,834 per kg. Gold rates, according to analysts at Kotak Securities, have weakened lately also as selloff in commodities have intensified on back of demand concerns and firmer US dollar.

In global markets,  gold prices were steady at $1,711.36 per ounce, supported by a slight dip in US dollar though the greenback remained at elevated levels. A strong dollar makes greenback-priced bullion less expensive for buyers holding other currencies. Traders will be looking at the Thursday meeting of European Central Bank where policymakers are expected to raise interest rates by 50 basis points.

However, a rise in benchmark US 10-year Treasury yields put pressure on gold. Gold is seen as an inflation hedge but higher interest rates and bond yields raise the opportunity cost of holding bullion, which yields no interest. 

Gold is also pressurized by weaker investor interest as is evident from ETF outflows, according to analysts. 

“The US dollar fell in last few sessions amid debate about pace of Fed’s rate hike but continues to remain supported by safe haven buying amid global growth worries and expectations that Fed may lead other central banks in monetary tightening. ETF outflows also shows lack of investor interest despite lower prices. Gold has stalled near $1700/oz level after the sharp sell-off in last few days. However, a sustained rise is still difficult as outlook for US dollar still remains firm," said Ravindra Rao, VP- Head Commodity Research at Kotak Securities.

Among other precious metals, spot silver firmed 0.3% to $18.79 per ounce.

Market players would also be monitoring the virus situation in China, which has seen a fresh surge in cases. They are worried that if China continues with its zero tolerance policy and uses restrictions to limit the virus spread it may affect economic activity and overall demand for commodities, including gold, Kotak Securities said in a note.

Gold, Silver Technical Outlook

“Recovery upticks in gold are expected only a consistent trades above $1760. Else, weak bias to continue the day," said domestic brokerage Geojit.  As long as silver “prices stay below $20.50 bearish outlook to continue in the counter. Upside turnaround point is placed at $22.50," the brokerage added. 

(With Agency Inputs)

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