In global markets, gold today fell to nine-month lows as the US dollar held near 20-year highs. Spot gold was flat at $1,734.97 per ounce, after hitting its lowest since Sept. 30 of $1,722.36 earlier in the session. The euro was near parity to the dollar on concerns that concerns that an energy crisis could tip Europe into recession. Strength in the dollar makes greenback-priced gold more expensive for buyers holding other currencies.

In India, gold has corrected sharply from last week's highs amid softening global rates. Last week, gold had jumped to of Rs52,300 in domestic markets after the government in a sudden move hiked the import duty the check the depreciation of rupee. India imports bulk of its gold requirement. Apart from import duty, the rupee-dollar rate and GST rate (3% currently) determine the domestic prices of the precious metals. On MCX, gold rates were flat at Rs50,600 levels.

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

Higher interest rates increase the opportunity cost of holding bullion, which yields no interest.

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

The recent robust jobs data in the US has further cemented market expectations that Fed may continue with aggressive rate hikes to get inflation under control, said Ravindra Rao, VP- Head Commodity Research at Kotak Securities.

"Weakness across commodities and continuing ETF outflows is also weighing on gold price. However, supporting price is renewed virus concerns in China and some other parts of Asia and rise in China’s consumer price at the fastest pace in two years. Gold has already fallen sharply on Fed’s tightening expectations and we may see some consolidation unless there are fresh 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 and eased safe-haven buying of precious metals. Gold prices slipped to 9-month lows and silver prices also dipped to nearly 2-year lows. Aggressive interest rate hike prospects by the U.S. Federal Reserve and strength in the dollar index weighed on precious metals," said Rahul Kalantri, VP Commodities, Mehta Equities Ltd.

“Bullions 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 Rs50,350–50,120, while resistance is at Rs50,860–51,040. Silver has support at Rs56,350-55,750, while resistance is at Rs57,480–57,810."

On MCX, silver rates were 0.35% lower at Rs56,730 per kg.