Gold prices opened on the Multi Commodity Exchange (MCX) on Tuesday at Rs 61,393 per 10 grams and hit an intraday low of Rs 61,373. In the international market, prices hovered around $1,993.00 per troy ounce.
Meanwhile, silver opened at Rs 70,836 per kg and hit an intraday low of Rs 70,750 on the MCX. The price hovered around $22.73 per troy ounce in the international market.
COMEX Gold held yesterday’s sharp declines and trades near $2,000 per oz as hotter-than-expected US inflation report diminished hopes that the Federal Reserve may soon pivot to monetary easing, per Kotak Securities research report.
However, Jateen Trivedi, VP Research Analyst, LKP Securities, said, “Yesterday, gold traded positively on the MCX, up by approximately Rs 200 to reach Rs 62,280, following a technical glitch that delayed the market opening until 1:00 PM. The delayed opening caused traders to miss out on lower rates, as Comex gold experienced a positive rally of $4 between 9:00 AM and 1:00 PM. With focus now shifting to the upcoming US Consumer Price Index (CPI) data, expectations are for a lower reading at around 2.90%, compared to last month’s 3.3% on a year-on-year basis.”
Meanwhile, gold traded positively but closed on a negative note. Anuj Gupta, Chief of Commodity and Currency at HDFC Securities, said, “Yesterday gold prices closed on with negative note corrected by 0.92% and closed at 61504 levels, which is 2 month low levels. Silver prices also corrected by 1.93% and closed at 69639 levels.”
US Core consumer price index rose 0.4% in January from December, the most in eight months, and Headline CPI advanced 0.3% from December and 3.1% from a year ago, beating estimates of a 2.9%
The US 2-year Treasury yield jumped to a month high of 4.669%, and the 10-year yield surged to 4.332%, the highest since late November, as traders are now only fully pricing in three Fed rate cuts for this year.
The US dollar is trading at 3-month high levels due to Hotter than expected US CPI data indicating no cut in interest rates in the near term. Traders of short-term US interest-rate futures bet the Fed will not cut rates until June after strong inflation data.
Manav Modi, Analyst, Commodity and Currency, MOFSL, said, “Gold prices fell below the key $2,000 level, a two-month low, as a stronger-than-expected U.S. inflation report tempered prospects of an early interest rate cut from the Federal Reserve.”
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“The rate cut probability in May dropped from 50% to 30% after the data, signalling the delay in interest rate cuts in this year, weighing on bullion. Investors this week will focus on US retail sales, PPI and IIP data, which could further trigger volatility in the market. The market will also listen to comments from a slew of Fed officials this week,” said Modi.
COMEX Silver plunged more than 2% on Tuesday, tracking a decline in industrial metals and bullions amid a strong US dollar and pessimistic industrial sentiment in China. Persistent macroeconomic headwinds in China, the world’s top consumer, continued to hamper the outlook for industrial metals.
Deflation in the country unexpectedly rose to a 14-year high, while the official manufacturing PMI pointed to the fourth consecutive contraction in January. On the other hand, higher-than-expected inflation numbers coupled with a resilient economy in the US lifted the greenback, weighing on Silver prices, per Kotak Securities research report.