Gold and silver prices today: Yellow metal drifts lower as US dollar and Treasury yields inch up

Gold prices opened on the Multi Commodity Exchange (MCX) on Tuesday at Rs 58,616 per 10 grams and hit an intraday low of Rs 58,616. In the international market, prices hovered around $1,916.03 per troy ounce. Meanwhile, silver opened at Rs 71,961 per kg and hit an intraday low of Rs 71,751 on the MCX. The price hovered around $23.14 per troy ounce in the international market.

Anuj Gupta, Head of Commodity and Currency at HDFC Securities, said that gold prices corrected sharply yesterday by 0.42 per cent and closed at 58701 levels on the back of strength in the dollar index. The Dollar Index trades at a 10-month high level of 105.70 levels, putting pressure on gold as demand shifts from gold to the dollar. “FOMC kept interest steady, but they indicated one more hike this year. In the international market, gold is trading at $1913 levels. Gold may trade between $1905 and $1915 levels [internationally], and on MCX, it may trade between 58400 to 59000 levels. It may test $1905 to $1910 levels as the dollar index is trading higher due to hawkish statement from Fed,” said Gupta.

Further, gold prices drifted lower as the US dollar and Treasury yields increased, with investors awaiting a key consumer inflation report for more cues on whether the Federal Reserve will hike interest rates again this year.

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Manav Modi, analyst of commodity and currency Motilal Oswal Financial, said, “The dollar hit a 10-month high at 106 mark, while benchmark 10-year Treasury yields continued their ascent to a fresh 16-year peak, moving past the 4.5 per cent level. Forecasts published on Wednesday showed that a majority of Fed policymakers see one more rate hike in the next three months. Still, investors continue to price in only about a 50 per cent chance of further tightening in 2023. Fed official Kashkari mentioned that the effects of balance sheet run-off may not be fully felt yet; falling Inflation next year might justify backing off the policy tightening measures. A US government shutdown would harm the country’s credit, rating agency Moody’s said. Focus today will be on the US new home sales and Consumer confidence data.”

Yesterday, spot gold closed with a loss of 0.44 per cent at $1916.28 as the US yields snapped back higher following a decline Friday. The ten-year yields reached a 16-year high as they scaled a fresh cyclical high to close 2 per cent higher at 4.53 per cent. Thus, the US Dollar Index strengthened despite better-than-expected IFO survey readings from the Eurozone. The US Dollar Index closed with a gain of 0.36 per cent at 105.95.

Praveen Singh, Associate VP, Fundamental Currencies and Commodities, Sharekhan by BNP Paribas, said, “Total known global gold ETF holdings increased for the first time in seventeen days on September 22. Support is at $1913/$1900/$1885, whereas resistance is at $1926/$1929/$1942.”

Deveya Gaglani, Research Analyst - Commodities, Axis Securities, said that gold prices did not close on a very positive note in the last session. On the daily chart, it has formed a large red candle and has closed below 20 and 9 EMA."

"Rising bond yields and a strong dollar index have dented the sentiments of precious metals and the prospects of higher interest rates in the United States, as indicated by various central banks, including the U.S. Federal Reserve, which has reduced the risk appetite in the Financial Markets. Higher interest rates are intended to control inflation, but it has a negative effect on Gold prices due to its non-yielding nature, added Gaglani.