Gold price in India witnessed a significant drop on Wednesday. On the Multi-Commodity Exchange (MCX), gold futures tumbled 0.23 per cent to Rs 52,370 for 10 grams at 1445 hours on August 10. Silver price also saw a sharp drop. The precious metal future declined by 0.29 per cent to Rs 58,621 for a kilogram.
Spot gold was down 0.1 per cent at $1,791.60 per ounce, as of 0127 GMT while US gold futures were down 0.2 per cent at $1,808.20, Reuters reported. Investors will keenly follow the United States inflation data to understand how fast central bank will increase interest rates.
US inflation might have eased to to 8.7 per cent in July from 9.1 per cent in June, according to Reuters poll. Core inflation is expected at 0.5 per cent month-on-month. The US Federal Reserve hiked rates by 75 basis points each in June and July to tame soaring inflation. Higher interest rates have dented appeal of yellow metal globally.
“US inflation data is expected to see some easing in price pressure which may give US Federal Reserve room to slow down the pace of rate hikes but the question is if one reading will be enough for Fed to alter its stance. An improvement in inflation is already factored in so unless we see a significant improvement, we do not expect the US Fed to alter its stance which may keep pressure on gold prices,” said Ravindra Rao, CMT, EPAT, VP- head commodity research at Kotak Securities.
“Concerns over inflationary pressures and geopolitical uncertainty lifted demand for safe haven assets. However, a rebound in US 10-year bond yields and worries over faster rate hike by the United States Federal Reserve capped further gains in the precious metals,” said ICICI Direct in a report.
Gold Price Future: What Investors Should Know
“MCX gold prices are expected to trade with a positive bias for the day amid weakness in US dollar index. It is likely to head towards Rs 53,000 for the day. Further, silver prices are expected to take cues from gold prices and may rise towards Rs 60,000 levels in coming sessions. Additionally, investors will remain cautious ahead of CPI data from the US,” it added.
“High global inflation, effects on treasury yields and dollar had given some strength to gold prices earlier. However, the cool off in metal prices, recovery in equity markets and stronger dollar is mounting pressure on gold prices. The US inflation data due today may be the key driver of gold trend. Buy Zone Near – Rs 52,200 for the target of Rs 52,500. Sell Zone Below – Rs 52,100 for the target of Rs 51,800,” said Dr Ravi Singh, vice President and head of Research, Share India.
“Domestic gold futures prices could start flat this Wednesday morning, tracking overseas markets. A weaker Rupee could cap downside. Today’s range of MCX October gold contract is Rs 52,310-52,630,” said Sriram Iyer – senior research analyst at Reliance Securities.
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