Gold prices jump on lower US bond yields, still down 20% from record highs; silver crosses Rs 65,000 per kg

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March 24, 2021 10:16 AM

Gold prices were trading higher on Wednesday, tracking the international spot prices as US Treasury yields held close to a one-week low.

gold price, gold ratesHowever, weighing on price is continuing ETF outflows which show weaker investor interest. Image: Reuters

Gold prices were trading higher on Wednesday, tracking the international spot prices as US Treasury yields held close to a one-week low, with bullion shrugging off strength in the dollar on Powell’s reassurance that inflation would not spiral out of control. On MCX, gold April futures were trading Rs 158 or 0.35 per cent up at Rs 44,804 per 10 grams as against the previous close of Rs 44,646. Silver May futures were ruling at Rs 65,225 per kg, up Rs 253 or 0.39 per cent, as compared to a previous close of Rs 64,972 on the Multi Commodity Exchange. Gold was trading higher on the back of correction in US bond yields, increased virus concerns, US-China tensions, Fed’s dovish stance and mixed economic data from major economies.

However, weighing on price is continuing ETF outflows which show weaker investor interest. “Gold may remain choppy as correction in yields is countered by a firm US dollar but renewed virus concerns may boost safe-haven buying,” said Ravindra Rao, VP- Head Commodity Research at Kotak Securities. Gold prices are now down Rs 11,387 or 20.26 per cent from an all-time high of Rs 56,191 per 10 gram on MCX in August 2020.

COMEX gold was trading marginally lower near $1733/oz after a 0.2 per cent decline in the previous session. “It has formed a good support zone near $1710-1730 levels,” said Jigar Trivedi, Fundamental Research Analyst, Anand Rathi Shares and Stock Brokers. Although the investment demand has faltered, the sentiment has not turned completely bearish in the yellow metal. “Amid a rise in the third wave in the EU, we believe gold may rebound now,” he added. MCX April gold has strong support near Rs 44,500 and Rs 45,300-46,000 is resistance.

MCX gold gained in today’s session due to depreciation in the rupee. The yellow metal witnessed selling on US Fed comments which boosted buying in the dollar. The US Fed chairman said that the spike in inflation will be “one-off” as the Fed has enough tools to maintain a 2 per cent target, says Tapan Patel, Senior Analyst (Commodities), HDFC Securities. Patel added that MCX Gold April futures support lies at Rs 44,500 and resistance at Rs 45,000 per 10 gram.

Globally, spot gold was up 0.3 per cent at $1,731.75 per ounce. US gold futures were up 0.4 per cent at $1,732.70 per ounce. Treasury yields slipped to the lowest since March 16, while the dollar jumped above a two-week high after Powell told US lawmakers on Tuesday he expected inflation to rise over the year but it would be “neither particularly large nor persistent, according to Reuters.

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