Fri. Jun 9th, 2023
  • Gold traders remained cautious ahead of US inflation data

Gold prices remained weak today with MCX futures edging lower to 50,891 per 10 gram as the precious metal declined for the fourth straight day. Silver futures were flat at 57,335 per kg. Domestic gold rates have dropped over 1,000 in past four days. International gold prices were steady at $1,670.20 per ounce as traders remained cautious stance ahead of a key US inflation data scheduled later today. A stronger reading would be negative for gold, say analysts.  Spot silver fell 0.6% to $18.95 per ounce. 
Though the yellow metal is considered an inflation hedge, monetary tightening by the Fed and consequent rise in bond yields has pressured the precious metal since the metal yields no interest.
Gold has dropped sharply from $2,000 levels in March. 
Also on focus of market participants are new covid restrictions in China, the top gold consumer in the world. 
“ Gold prices await bigger triggers from US CPI inflation data which is to be released today as the expected data is lower at 8.1% compared to 8.3% last month. This can keep Gold prices in supportive range as any lower number in inflation will guide the dollar index lower and help gold prices raise higher. On the other hand any rise in inflation beyond or around 8.5% shall add pressure to gold prices as Fed in next meeting shall have more reasons to raise rates higher and maintain hawkish tone,” said Jateen Trivedi, VP Research Analyst at LKP Securities.
Minutes of Fed officials latest meeting suggested that they needed to raise interest rates to a more restrictive level – and then maintain them there for some time – to meet their goal of lowering “broad-based and unacceptably high” inflation, a readout of last month’s policy meeting showed on Wednesday. Fed officials have hiked by 75 basis points at their last three meetings.
“Although bullion looks vulnerable to more downside amid FOMC minutes and inflation data, geopolitical tensions and global slowdown concerns might support the prices at lower levels. On the price action front $1660/ounce would act as a good support whereas resistance is pegged near $1694/ounce above which the bulls might once again regain strength to push it further higher,” Kotak Securities said in a note. 
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