Gold prices fall for second day in a row after hitting all-time highs

The dollar index was today up 0.25% to 102.403. The Japanese yen tumbled and bonds notched their biggest rally in two decades today after the country’s central bank stuck to its ultra-easy monetary policy, defying expectations that it would start phasing out its massive stimulus programme.

“Gold prices fell on as the dollar ticked up, while investors still sought direction from the U.S. Federal Reserve’s rate hike path. The dollar index gained, making gold more expensive for overseas buyers, while benchmark 10-year yields also moved up,” said Rahul Kalantri, VP Commodities, Mehta Equities Ltd. 

Investors will keep an eye out for the U.S. producer price index (PPI) and retail sales data due later in the day. The U.S. central bank raised rates by 75 basis points (bps) four times last year, before slowing to a 50-bp increase in December. Traders are mostly pricing in a 25 bps hike at the Fed’s next policy meeting. Lower interest rates tend to be beneficial for bullion, decreasing the opportunity cost of holding the non-yielding asset.

In global markets, spot silver today fell 0.1% to $23.90 per ounce.

“We expect gold and silver to remain volatile in today’s session. Gold has support at $1892-1880 while resistance at $1924-1940. Silver has support at $23.75-23.50, while resistance is at $24.22-24.40. In rupee terms gold has support at ₹56,110-55,780, while resistance is at Rs56,580, 56,710. Silver has support at ₹68,550-68,120, while resistance is at Rs69,620–70,080,” he added. 

Jateen Trivedi, VP Research analyst at LKP Securities, said a stronger dollar could trigger profit-taking in gold. “Dollar index rising can put gold in profit booking stage as dollar index has priced in the weakness in US inflation. Gold in MCX can be seen in the range of 56,000-56,700″ in near term, he said. 

(With Agency Inputs)