Gold and silver prices today: Yellow metal weakens after dollar index touched a six-month high

Gold prices opened on the Multi Commodity Exchange (MCX) on Friday at Rs 58,730 per 10 grams and hit an intraday low of Rs 58,729. In the international market, prices hovered around $1,931.85 per troy ounce. Meanwhile, silver opened at Rs 72,993 per kg and hit an intraday low of Rs 72,984 on the MCX. The price hovered around $23.20 per troy ounce in the international market.

Anuj Gupta, Head of Commodity and Currency at HDFC Securities, said the Indian rupee has received a welcome boost from the bond market. The inclusion of Indian government bonds in JPMorgan’s benchmark emerging-market index is positive news for the currency, especially at a time when the current account is deteriorating. The index provider will add Indian securities to the JPMorgan Government Bond Index-Emerging Markets starting June 28, 2024. “The bond inflows will be significant. Indian bonds will have a maximum weight of 10 per cent in the index, and estimates suggest flows could be as much as $20-25 billion.”

Yesterday, spot gold closed with a loss of 0.52 per cent at $1919.57 as the 10-year US yields surged on hawkish US Federal Reserve, encouraging forecasts for the US economy.

Praveen Singh, Associate VP, Fundamental Currencies and Commodities, Sharekhan by BNP Paribas, said, “US two-year yields closed around 0.57 per cent lower, though the ten-year yields surged past the previous key resistance at 4.35 per cent to settle 2.16 per cent up at 4.49 per cent. Bank of England unexpectedly kept its benchmark rate unchanged at 5.25 per cent in a closely divided verdict, which boosted the US Dollar further. The Index closed with a gain of 0.26 per cent at 105.39. Russia boosted its gold reserves holdings in August back to 2023 highs, which means its total holdings now stand at 2,333 tonnes. Outlook of the yellow metal is bearish unless we see significant weakness in the major US data.”

Also read: Gold vulnerable on stretched valuation as bond yields and Dollar rise

Also read: Gold and silver prices today: Yellow metal trades at 59,222 and silver at 72,284

Meanwhile, total known global gold ETF holdings continue to fall as the outflows extend to fifteen straight days through September 20.

Amit Khare, Associate Vice President at GCL Broking, said, “October Gold closed at 58822 (-0.98 per cent) and December Silver closed at 73068 (-0.20 per cent). Bullion’s daily charts are looking good and making bottom. Momentum Indicator RSI also indicates the same. So traders are advised to make fresh buy positions in Gold and Silver near the given support level one with the stop loss of support level two and book near the given resistance levels: Gold October Support 58800/58600 and Resistance 59100/59200. Silver December Support 72600/71900 and Resistance 73300/73600.”

Prithviraj Kothari, MD CEO of RiddiSiddhi Bullions Limited (RSBL), said, “Gold prices are trading weak after the Dollar Index touched a six-month high, while US Treasury yields reached multi-year highs after the Federal Reserve indicated that interest rates in the US would remain higher for longer. While the Fed held rates constant on Wednesday, Powell stated that the Fed will cut rates by a smaller percentage than predicted in 2024, despite recent increases in US inflation. This is a negative aspect of precious metals. Gold prices have been making lower highs and lower lows patterns, since touching record-high prices in May. Near-term resistance is $1970, and support is $1920. Prices need to break this range to set a one-way direction.”

However, gold traded steady, hovering near a one-week low touched in the previous session as the U.S. dollar and treasury yields reaped the returns of the Federal Reserve’s hawkish stance on interest rates.

Manav Modi, Analyst,  Commodity and Currency, MOFSL, said, “The dollar stood near a six-month peak on the prospect of higher-for-longer U.S. rates, while benchmark 10-year Treasury yields rose to 16-year highs. Fed announced hawkish pause, increased growth forecast and slightly lowered the core inflation estimates.”

Governor Powell’s statements and the dot plot showed that the US central bank is looking to raise rates once more before the end of this year and will continue to act towards bringing the inflation down to its target of 2 per cent. Meanwhile, BOE too kept their rates unchanged but raised inflation concerns keeping the overall tone a bit hawkish. On data front, U.S. jobless claims dropped to an eight-month low last week, pointing to persistent labour market tightness even as job growth is cooling.

“While the Philadelphia fed manufacturing index was reported significantly lower supporting metal prices. Focus today will be on the Manufacturing and Services PMI data from major economies,” said Modi.