21 Jun , 2021 By : Kanchan Joshi
Gold prices edged higher in Indian markets today after a sharp fall the previous week. On MCX, gold rates rose 0.4% to Rs46,911 per 10 gram while silver dropped 0.04% to Rs67571 per kg. Gold had slumped a combined Rs1,600 on Thursday and Friday, in tandem with a sharp drop in global rates. And as compared to the start of this month, rates are down about Rs2,500.
In global markets, gold rates were higher today after posting their biggest weekly loss in 15 months. Spot gold was up 0.5% at $1,772.34 per ounce after suffering a 6% drop last week. The US Federal Reserve surprised the markets last week by signalling it would raise interest rates sooner than expected. As a result, the US dollar held near multi-month peaks against other major currencies, dimming the appeal of non-interest paying gold.
Meanwhile, the price drop in gold attracted ETF buyers. The holdings of world's largest gold-backed exchange-traded fund, SPDR Gold Trust, rose 1.1% to 1,053.06 tonnes on Friday from 1,041.99 tonnes on Thursday.
Among other precious metals, silver was up 0.6% at $25.95 per ounce while platinum rose 0.4% to $1,037.89.
Meanwhile, retail demand perked up slightly in India, following the price drop as well as reopening of the economy, Reuters reported.
A top Fed official on Friday said inflation risks may warrant the U.S. central bank beginning raising interest rates next year. His comments came after last week's Fed meeting where officials signaled monetary policy tightening could start earlier than expected. Chairperson Jerome Powell saying that the Fed would begin a discussion about scaling back bond purchases used to support financial markets and the economy during the pandemic.
Analysts said that technically gold remains oversold and could be bought on dips. But they cautioned that gold could be vulnerable to further pullbacks if the Fed signals a firm stance on tapering.
"Gold’s sharp fall has dented market sentiment and we may see weakness persisting unless there is a sharp correction in US dollar. However, choppiness is likely to continue as market players react to central bank decisions, economic readings," Kotak Securities said in a note.
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