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Gold Prices Today: Strong US dollar, further interest rate hikes to cap yellow metal's gains

Higher inflation makes safe havens more appealing, driving up demand for precious metals. However, rising interest rates will limit gold's gains, and selling pressure is predicted in today's session at higher levels, said Nirpendra Yadav, Senior Commodity Research Analyst at Swastika Investmart.

May 12, 2022 / 10:40 AM IST
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Representative Image

Gold gained on Thursday in the international market as the dollar and Treasury yields slipped after the US consumer price data suggested inflation might have peaked in April, allaying some concerns of more aggressive Fed rate hikes. A weaker dollar makes gold attractive for overseas buyers, while lower Treasury yields reduce the opportunity cost of holding zero-yield bullion.

Spot gold was up 0.2% at $1,855.11 per ounce, as of 0103 GMT, having risen as much as 1.1% in the previous session. US gold futures rose 0.2% to $1,856.90.

At 9:39 am, gold contracts were up 0.17 percent at Rs 50,907 for 10 gram on the Multi-Commodity Exchange (MCX), while silver shed 0.17 percent at Rs 60,650 a kilogram.

Gold and silver prices bounced yesterday as the US dollar index retreated after US inflation data rose to 8.3% YoY against 8.1% forecasted earlier. The benchmark treasury yield in the United States fell below 3%, boosting precious metals prices at lower levels. Currently, higher gasoline costs have created inflationary pressure. China's inflation rate increased to 2.1 percent from 1.5 percent in the previous month. Higher inflation makes safe havens more appealing, driving up demand for precious metals. However, rising interest rates will limit gold's gains, and selling pressure is predicted in today's session at higher levels. Technically, gold has resistance at  Rs 51000 and support at Rs 50300. Silver has resistance at Rs 62200 and support at Rs 60000, said Nirpendra Yadav, Senior Commodity Research Analyst at Swastika Investmart.

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Ravindra Rao, CMT, EPAT, VP- Head Commodity Research at Kotak Securities

COMEX gold trades mixed near $1850/oz after a 0.7% gain yesterday. Gold has recovered from 3-month low as US dollar index and bond yields shed some of their recent gains. Gold also benefitted from increased demand as inflation hedge and as inflation data from major economies highlighted higher price pressure. ETF outflows and Fed’s monetary tightening outlook has however kept a check on gold price. Gold has stabilized near $1850/oz level however a sharp rise may not materialize unless US dollar index corrects sharply.

Tapan Patel, Senior Analyst (Commodities), HDFC Securities

Gold prices held steady on Thursday with spot gold prices at COMEX were trading firm near $1853 per ounce in the morning trade. The yellow metal witnessed knee jerk reaction post US inflation data which slightly rose in the month of April. The dollar and US bond yields responded to the record inflation numbers boosting buying in gold. The fall in equity indices and plunge in crypto currencies also supported gold prices to trade firm.

We expect gold prices to trade sideways to up for the day with COMEX Spot gold support at $1830 and resistance at $1870 per ounce. MCX Gold June futures support lies at Rs 50300 and resistance at Rs 51200 per 10 gram.

Disclaimer: The views and investment tips expressed by experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.​



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Sandip Das
first published: May 12, 2022 10:40 am
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