NEW DELHI: Gold prices weakened to near two-week lows on Friday and looked set for their worst week in three months. Robust US economic numbers boosted dollar and bond yields. Yellow metal edged lower in domestic markets, falling from five-month highs.
All focus shifts to much awaited May non-farm payroll numbers. The number of Americans filing new claims for unemployment benefits dropped to new lows during pandemic, while US private employers stepped up hiring in May.
The rally in the dollar index pushed it to a three-week high against its rivals, making gold more expensive for holders of other currencies. Rise in 10-year benchmark yield challenged gold further.
Physical gold demand in India languished as shops in the majority of states are shut due to virus related curbs. ETF inflows have turned mild recently as investors are eyeing for riskier bets like equities. However, a rise in rupee may help the yellow metal.
Gold futures on MCX shed 0.04 per cent or Rs 18 at Rs 48,659 per 10 grams. Silver futures fell 0.08 per cent or Rs 57 to Rs 70,753 per kg.
“COMEX gold trades modestly lower near $1869/oz. Gold has fallen sharply as upbeat US economic data has pushed US dollar index and bond yields higher while adding to debate that Fed may tighten monetary policy,” Ravindra Rao, CMT, EPAT, VP-Head Commodity Research, Kotak Securities.
In the spot market, highest purity gold was sold at Rs 49,002 while silver was priced at Rs 71,240 on Thursday, according to the Indian Bullion and Jewellers Association.
“US equity markets have also stabilized on President Biden’s tax proposal. Gold’s sharp up-move in last few weeks has made it vulnerable to profit taking which may extend further if US dollar strengthens.”
Trading strategy
“We expect gold prices to trade sideways to down for the day with COMEX Spot gold support at $1850 and resistance at $1890 per ounce. MCX Gold August futures support lies at Rs 48200 and resistance at Rs 49000 per 10 gram,” said Tapan Patel, Senior Analyst (Commodities), HDFC Securities.
Global markets
Spot gold was down 0.1 per cent at $1,869.56 per ounce, as of 0038 GMT, after hitting its lowest since May 20 in the previous session. Prices have fallen 1.7 per cent so far this week. US gold futures eased 0.1 per cent at $1,872.10 per ounce.
Silver fell 0.2 per cent to $27.39 per ounce, palladium dipped 0.2 per cent to $2,832.33, and platinum slipped 0.4 per cent to $1,152.21.