Gold prices opened on the Multi Commodity Exchange (MCX) on Wednesday at Rs 59,315 per 10 grams and hit an intraday low of Rs 55,9004. In the international market, prices hovered around $1,931.85 per troy ounce. Meanwhile, silver opened at Rs 72,970 per kg and hit an intraday low of Rs 72,195 on the MCX. The price hovered around $23.20 per troy ounce in the international market.
Anuj Gupta, Head of Commodity and Currency at HDFC Securities, said that yesterday, gold prices closed on a positive note, up by 0.21% and closed at 59405 as due to demand against uncertainty in the global market.
"FOMC kept interest steady, but indicated a one more hike this year. We noticed that good numbers are adding in gold ETF in India which is positive for the gold. Gold’s latest challenge came as the Dollar Index hit a one-week high to reclaim the 105 mark. In the international market, gold is trading at $1926 levels. For trading, gold may trade between $1920 to $1940 levels and on MCX it may trade between 58800 to 59300 levels. It may test $1920 to $1915 levels as dollar index trading higher due to hawkish statement from fed," said Gupta.
Praveen Singh, Associate VP, Fundamental Currencies and Commodities, Sharekhan by BNP Paribas, said, "Traders, positioned for a Federal Reserve's signal of a pause in its rate hike campaign, pushed gold prices up in the vicinity of $1950; however, a hawkish FOMC monetary policy outcome and commentary sent the metal tumbling from its day’s high of $1947. Gold closed steady at $1931."
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Today, markets will be closely watching the Bank of England's monetary policy decision. A dovish 25 bps hike will further pressure the Sterling Pound.
Gold is vulnerable on stretched valuation as yields and Dollar rise on resilient US economy.
Gold price slipped as the U.S. dollar and bond yields powered higher after the Federal Reserve signalled another rate hike this year and a tighter monetary policy through 2024 than previously expected.
Manav Modi, Analyst, Commodity and Currency, MOFSL, said, "The U.S. dollar index climbed 0.4% to its highest since March 2023, while two-year Treasury yields rose to 17-year high after the Fed raised rate hike expectations. The Fed sketched a stricter policy path moving forward in an inflation fight, with a belief that they can lower the same without wrecking the economy or leading to large job losses."
Fed lowered their core inflation forecast 3.7% from 3.9% previously predicted for this year. Growth forecast YoY increased significantly to 2.1% from 1% this year. Even after a hawkish pause, the probability chart from CME Fed-Watch tool continue to suggest more than 70% probability for a pause in November fed meeting.
"The Bank of England will announce later in the day whether it is halting a run of interest rate hikes that stretches back to December 2021 or continuing on it's path of rate hikes. Focus today will also be on the US weekly jobless claims and Philadelphia Fed manufacturing index," said Modi.