Gold and silver prices continue to drift lower, indicating poor investing demand for the metal

Gold opened on the Multi Commodity Exchange (MCX) on Friday at Rs 56,735 per 10 grams and hit an intraday low of Rs 56,680. In the international market, prices hovered around $1,822.77 per troy ounce. Meanwhile, silver opened at Rs 66,886 per kg, hit an intraday low of Rs 66,825 on the MCX, and hovered around $20.99 per troy ounce in the international market. 

Spot gold consolidated its recent steep losses to end nearly $2 lower at $1,821. That the commodities ended lower despite a pullback in the US Dollar Index and the US yields indicates the downside pressure in the commodities complex. 

Praveen Singh, Associate VP, Fundamental Currencies and Commodities, Sharekhan by BNP Paribas, says, “Spot gold slipped below the key support at $1,815 but recovered on the U.S. Dollar weakness. Total known global gold ETF holdings fell again on October 4 indicating poor investment demand for the metal.” 

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Gold prices continued to drift lower in the last session and made a new seven-month low in the domestic market, i.e. 56,500 level. 

“As expected, gold prices corrected sharply by 0.20 per cent yesterday and closed at seven-month low of 56,608 on the back of strength in the dollar index. The Dollar Index is trading [high] and it is putting pressure on gold as demand is shifting from gold to dollar,” said Anuj Gupta, Head of Commodity and Currency at HDFC Securities 

Deveya Gaglani, Research Analyst–Commodities, Axis Securities, said, “On the daily chart, it has formed a red candle and has closed below 20 and 9 EMA. Rising bond yields and strong dollar indexes have dented precious metals sentiment. The near-term trend is looking unfavourable for prices. Traders will await Non-farm payroll data this evening, which may impact Fed monetary policy and influence Gold prices. All in all, strong support is placed around the 56500 level as long as the mentioned level is intact. On the downside, we expect Gold prices to trade between the 56,500 and 57,000 levels.”