Gold and silver prices today: Yellow metal hits one-week low as interest rate expectation amplifies

Gold prices opened on the Multi Commodity Exchange (MCX) on Wednesday at Rs 59,263 per 10 grams and hit an intraday low of Rs 59,165. In the international market, prices hovered around $1,937.30 per troy ounce. Meanwhile, silver opened at Rs 73,472 per kg and hit an intraday low of Rs 73,400 on the MCX. The price hovered around $23.79 per troy ounce in the international market.

Anuj Gupta, Head of Commodity and Currency at HDFC Securities, said, "Yesterday, Gold prices closed down by 0.25% and closed at 59243 levels on the back of strength in the dollar index. The dollar index is now trading above 104 levels on the expectation of a hike in interest rates by the U.S. Federal Bank. Today, traders can buy gold on dips around 59000 with a stop-loss of 58800 levels for the target of 59500 levels. Due to the depreciation in Rupee, traders can buy on dips. They can also go for sell around 59500 levels."

Yesterday, spot gold closed with a loss of 0.61% at $1926.37 as the U.S. treasuries tumbled, thus pushing yields higher, which in turn boosted the U.S. Dollar Index.

Praveen Singh – Associate V.P., Fundamental Currencies and Commodities, Sharekhan by BNP Paribas, said, "U.S. treasuries fell on hawkish Fedspeak and huge corporate bond issuance lined up for September. Surge in oil prices as Russia and Saudi Arabia extended their supply cuts through December is also instrumental in decline of treasuries. Although Fed's Waller seemed to be leaning towards a pause in the next FOMC monetary policy decision, Fed's Ms Mester called inflation to be too high  Ten-year US yields at 4.96% were up 1.10%, whereas two-year yields jumped by 1.30% to 4.261%. The U.S. Dollar Index closed with a gain of 0.60% at 104.78 as the Index surged to the highest level since March."

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Gold slipped to one-week lows, as U.S. Treasury yields and the dollar index advanced on expectations that interest rates are likely to remain high.

"Stronger than expected US ISM services data will weigh further on gold. Support is at $ 1915/$1900, while resistance is at $1955/$1965. Weaker than expected data may help gold erase some of its recent losses," said Singh.

Manav Modi, Analyst, Commodity and Currency, MOFSL, said, "The U.S. dollar rose to a near six-month high against its major crosses in the last session, while benchmark 10-year bond yields reached their highest level in over a week, dampening appetite for bullion."

Expectations that the Fed will keep rates higher for longer have kept the gains for gold in check, with recent labour and inflation indicators showing that the central bank still needs to keep policy restrictive in the near term. Federal Reserve Governor Christopher Waller said the latest round of economic data was giving the U.S. central bank space to see if it needs to raise interest rates again.

"Global business activity largely slowed further last month as services firms struggled in the face of weak demand as rising prices and borrowing costs made indebted consumers rein in spending. U.S. factory orders were reported a bit better than expectations but fell sharply against the previous month, -2.1% v/s 2.3%. Focus now shifts to Services PMI data from major economies and a slew of Fed speakers this week," said Modi.

Amit Khare, Associate Vice President at GCL Broking, said, "October Gold closed at 59243(-0.25%) and December Silver closed at 73445(-1.45%). Bullions daily charts are looking weak. Momentum Indicator RSI also indicates the same. So traders are advised to book their long positions and can make fresh short positions in Gold and Silver near given resistance level one with the stop loss of resistance level two and book near given support levels: Gold October Support 59200/59000 and Resistance 59500/59700. Silver December Support 73000/72500 and Resistance 74000/74600."