The price of gold falls to a 9-month low today, the price of silver falls

In global markets, gold fell to a nine-month low today as the US dollar held near a 20-year high. Spot gold was flat at $1,734.97 an ounce after hitting its lowest since September 30 at the start of the session at $1,722.36. The euro traded at near par against the dollar on concerns that an energy crisis could plunge Europe into recession. The dollar’s strength makes greenback gold more expensive for buyers holding other currencies.

In India, gold has corrected sharply from last week’s highs amid softening global interest rates. Gold jumped to of last week 52,300 in domestic markets after the government raised import tariffs in a sudden move to check the devaluation of the rupee. India imports much of its gold needs. Apart from the import duty, the rupee-dollar rate and the GST rate (currently 3%) determine the domestic prices of precious metals. On MCX, gold prices were unchanged at 50,600 levels.

Gold traders will be watching US inflation numbers later this week to gauge whether the Federal Reserve will continue to aggressively tighten policy to contain inflation.

Higher interest rates increase the opportunity cost of holding bullion that earns no interest.

Among other precious metals, spot silver rose 0.3% to $19.14 an ounce, while platinum fell 0.7% to $863.82.

Recent robust US employment data has further bolstered market expectations that the Fed may proceed with aggressive rate hikes to keep inflation under control, said Ravindra Rao, VP head of commodity research at Kotak Securities.

“Weakness in commodities and continued ETF outflows are also weighing on gold prices. However, price is supported by renewed virus concerns in China and some other parts of Asia and consumer price inflation in China at the fastest rate in two years. Gold has already fallen sharply on Fed tightening expectations and we may see some consolidation unless there are new triggers,” he added.

Gold Technical Outlook

“Gold and Silver plunged again amid strength in the dollar index. The dollar index hit fresh 20-year highs, facilitating safe-haven buying of precious metals. Gold prices slipped to a 9-month low and silver prices also fell to almost a 2-year low. Aggressive Federal Reserve rate hike prospects and dollar index strength weighed on precious metals,” said Rahul Kalantri, VP Commodities, Mehta Equities Ltd.

“Bars will be volatile in today’s session. Gold has support at $1720-1708 while resistance is at $1740-1751. Similarly, silver has support at $18.65-18.50 while resistance is at $19.20-19.42. In rupee terms, gold has support at 50,350-50,120 while resistance is at 50,860-51,040. Silver has support at 56,350-55,750 while resistance is at 57,480–57,810.”

On the MCX, silver prices were down 0.35% 56,730 per kg. (With agency entries)

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