Struggle after sharp fall in gold prices today, fall in prices

In global markets, gold was trading below the crucial level of $1,800 an ounce, as a firmer US dollar and higher bond yields hurt the precious metal’s safe-haven appeal. Spot gold was flat at $1,796.03 an ounce, after losing $1,791.90 in the previous session.

Corrective selling pressure is likely in Sleep Domestic brokerage Geojit says that till $1,835 is not withdrawn.

The US dollar index soared to a one-week high of 92.543, while the benchmark 10-year Treasury note soared as high as 1.385% on Tuesday. The higher return increases the opportunity cost of holding interest-free bullion.

Among other precious metals, silver rose 0.1% to $24.32 an ounce, while platinum rose 0.3% to $1,001.36.

Geojit said as long as silver stays above $23.70, there is a possibility of further downside, but a direct fall below it is a sign of weakness.

Analysts say investor interest in gold is weak amid firming equity markets. According to Kotak Securities, gold holdings with the world’s largest gold exchange fund SPDR ETF fell to an April 2020 low of 998.52 tonnes last week.

The brokerage said gold could see volatility as the monetary policy outlook of the Fed and other central banks could impact the US dollar, but rising global uncertainty could continue to support prices, the brokerage said.

Analysts say while central banks are the focus, gold is backed by uneven global economic recovery, virus concerns.

Traders will keep an eye on the outcome of the ECB meeting to be held this week. The European Central Bank is scheduled to hold its monetary policy meeting this week and there is growing talk that the central bank may soon begin bond tapering in view of increasing inflationary pressures.

(with agency input)