Gold rate today: Yellow metal drops after Fed rate hikes, Silver holds Rs 58,000

New Delhi: Gold prices dropped sharply on Thursday following the aggressive rate hikes from the US Fed which dented the bullion’s appeal. Furthermore, a strong dollar pulled the yellow metal lower.

The Fed raised interest rates by 75 basis points on Wednesday and said its battle against inflation will require borrowing costs to rise further, yet signalled it may be nearing an inflection point.

Gold futures on

were trading lower by 0.58% or Rs 291 at Rs 50,315 per 10 grams. Similarly, silver futures tanked sharply by 1.17% or Rs 690 at Rs 58,100 per kg.

Although gold is considered a hedge against inflation, higher interest rates increase the opportunity cost of holding the non-yielding asset.

Pritam Patnaik, Head – Commodities, Axis Securities, said the US Fed has effectively dashed any hope of a pause or slowdown in the future rate hikes, by continuing on the hawkish path.

This led to a boost to the dollar index and the US bonds, which in turn shaved off the bullion prices, he said. “The uncertainty of future Fed action has dented the appeal for gold in the short term,” he added.

In the spot market, the highest purity gold was sold at Rs 50,824 per 10 grams and silver was priced at Rs 58,627 per kg on Wednesday, according to the Indian Bullion and Jewellers Association.

The spot prices of gold have remained flat, about Rs 50,000 per 10-gram mark, for almost four weeks, whereas the spot prices of silver have gained more than Rs 3,000 per kg in the last two weeks.

Gold prices are reversing their recent gains on a strong dollar and surge in US treasury yields. Dollar and yields regained some strength after Fed Chair Powell dashed hopes that interest rate hikes will end soon, said ICICIDirect Research.

The US Federal Reserve raised its interest rate by 75 bps for a fourth consecutive time and said that it was very premature to consider pausing rate hikes, it said. “Gold prices are expected to trade with a negative bias,” it added.

Trading Strategy

Rahul Kalantri, VP Commodities, Mehta Equities said that gold has support at $1,624-1,616, while resistance is at $1,648-1,658. Silver has support at $18.95-18.78, while resistance is at $19.42-19.62.

“In Rupee terms, gold has support at Rs 50,380-50,150, while resistance is at Rs 50,840, 51,080. Silver has support at Rs 58,080-57,410, while resistance is at Rs 59,480–59,910,” he added.

Global markets

Spot gold rose 0.2 per cent to $1,638.32 per ounce, as of 0118 GMT, after falling 0.8 per cent on Wednesday. US gold futures fell 0.6 per cent to $1,640.70.

Spot silver rose 0.3 per cent to $19.33, platinum rose 0.6 per cent to $935.98 and palladium edged 0.3 per cent higher to $1,860.08.

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