Gold, silver prices: Gold recovers early losses amidst a fall in US dollar and treasury yields

Gold prices on the Multi Commodity Exchange (MCX) opened lower on Thursday at Rs 60,115 per 10 grams and hit a low of Rs 59,990 per 10 gm at around 11:20 AM. In the international market, the price of gold hovered around $1,965.50 per troy ounce. 

Similarly, today’s Silver rate opened at R 71,857 per kg levels and hit an intraday low of Rs 71,711 on MCX. Today's silver price in the international market is around $23.50 per troy ounce. 

Manav Modi, analyst, commodity and currencies, at Motilal Oswal Financial Services (MOFSL), said, “Gold bounced back from early losses in the previous session, amidst a fall in the US dollar and treasury yields, following a wider market optimism about the US debt ceiling deal. Top congressional Republican Kevin McCarthy urged members of his party to support a bipartisan deal to lift the $31.4-trillion US debt ceiling, and a key party hardliner said he would likely support the measure in a critical procedural vote.”

Modi added: “US Fed funds futures traders now see the Fed as more likely to hike interest rates next month than leave them unchanged amidst positive economic data and ease off in debt ceiling concerns. The probability chart shows more than a 60 per cent chance for a 25 basis points (bps) rate hike, which was till last week in favour of a pause. Surprisingly, US consumer confidence data was reported higher than anticipation yesterday, showing the market’s optimism regarding the economy and weighing on billions. Focus today will be on comments from a few Fed officials and India's GDP data. Broader trends on COMEX could be in the range of $1,940-1,970; on the domestic front, prices could hover in the range of Rs 59,500-60,350”. 

Gold prices edged lower today amid firm dollar. Further, demand for safe haven declined after US House of Representatives passed the bill to suspend the federal debt ceiling averting default in the world largest economy.

Raj Deepak Singh, Analyst – Commodity, Currency, & Derivatives, ICICI direct said “We expect gold prices to take support near $1900 and rise further till $2000 levels in the coming sessions amid expectation of correction in dollar and US treasury yields across the curve. Forecast for upcoming economic data from US seems to signals that economy is feeling the heat of rate hike and should support our view of pause in rate hike from upcoming meeting and possible rate cut by the end of the year. Even some of the policymakers were seen of having opinion of hitting pause button to see how the impact of past tightening is weighing on activity. On top of this tightening credit conditions due to stress in banking sector may also prevent Fed from raising rates"

He added, “Additionally, investors fear that the debt deal will intensify the risk of recession by limiting government spending, which could make the Fed less likely to keep tightening. Moreover, after the debt deal US treasury has to refill its empty reserves by issuing bonds presumably at current high interest rates, sucking liquidity from the market."