Gold prices today: Yellow metal falls below Rs 48,800; should you buy?

NEW DELHI: Gold and silver futures prices were trading flat with negative bias on Monday as commentary from central banks suggests there could be a rate hike earlier than expected, which will be detrimental to bullion counters.

Bundesbank president Jens Weidmann publicly contradicted the European Central Bank’s official line on Friday, warning that inflation may stay above 2 per cent for some time and that the ECB should avoid any commitment to keeping the money taps open.

A hike in interest rates should reduce bullion’s appeal as higher rates raise the non-interest bearing metal’s opportunity cost.

Gold futures on MCX were down 0.11 per cent or Rs 52 at Rs 48,776 per 10 grams. Silver futures rose 0.01 per cent or Rs 9 to Rs 65,565 per kg.

“The yellow metal reported its first weekly decline in three weeks with a stronger dollar thanks to a rise in COVID-19 cases in Europe. The surge in US bond yields also pressured gold prices to trade down. We expect gold prices to trade sideways to down for the day,” said Tapan Patel, Senior Analyst (Commodities), HDFC Securities.

In the spot market, the highest purity gold was sold at Rs 49,235 while silver was priced at Rs 66,486 on Thursday, according to the Indian Bullion and Jewellers Association.

Trading strategy
Gold prices have fallen in a range-bound zone since the last few trading sessions as anticipated high and sustained inflation is supporting the prices whereas reduced Covid cases have increased the investment in riskier assets once again, said analysts.

“In the absence of any fresh trigger this week, we expect gold prices to trade between Rs 48,500 and Rs 49,300 with an upward bias. Gold is having a strong resistance near Rs 49,500 levels in MCX. Any breakout above Rs 49,500 will start a new trading territory in gold prices,” said Ravi Singh, Vice President & Head of Research, ShareIndia.

“Buy zone above Rs 48,950 for the target of 49,300. Sell zone below – Rs 48,800 for the target of Rs 48,600.”

Global markets
Spot gold was little changed at $1,845.48 per ounce by 0055 GMT. US gold futures fell 0.3 per cent to $1,846.80. Spot silver fell 0.1 per cent to $24.57 per ounce. Platinum eased 0.6 per cent to $1,025.33 and palladium dropped 0.7 per cent to $2,047.13.

Speculators raised their net long COMEX gold futures and options positions to 164,043 in the week to Nov. 16, while net long positions in COMEX silver also increased, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.

Physical gold demand in major Asian hubs softened last week, although Indian dealers looked to the upcoming wedding season for renewed interest in bullion.