Gold prices today fall, now close to one-year lows; silver rates drop

Gold prices today fall, now close to one-year lows; silver rates drop

Gold and silver prices today declined in Indian markets, tracking softer global rates. On MCX, gold futures fell 0.23% to ₹44,590 while silver edged lower to ₹64,840 per kg. In the previous session, gold fell 0.35% while silver declined 0.5%. Earlier this month, gold prices had dropped to nearly one-year lows of ₹44,150. After today's fall, the precious metal is down about ₹11,500 from August highs of ₹56,200.

In global markets, gold rates were flat today at $1,726 per ounce but were on course for about 1% weekly decline. In the previous session, the precious metal had hit a one-week low of $1,721. Among other precious metals, silver rose marginally to hold above $25 while palladium rose 0.2% to $2,614.51.

"Gold remains under pressure as long as it stay below the support of $1,760. Meanwhile, major liquidation pressure is seen only if it breaks below $1,660. A direct rise above $1,760 is required to trigger recovery upticks towards $1,820 or more," domestic brokerage Geojit says in a note. MCX gold faces resistance at ₹45,250 while has support at ₹44,220.

US Treasury yields rose after a weak auction of 7-year notes, weighing on gold. On the other hand, rising coronavirus cases supported the safe-haven demand for gold at lower levels. Gold is often considered as a safe-haven investment at times of economic uncertainties.
Gold in global markets is down about 9% so far this year amid optimism over a recovery and rise in US bond yields, which weighed on demand for the traditional haven. However, coronavirus concerns and easier monetary policy helped cushion gold’s fall.

Analysts at Credit Suisse had recently lowered their 3-month and 12-month gold forecasts to $1750 and $1700 per ounce, respectively, citing strength in US dollar and rise in US Treasury yields.

Kotak Securities expects gold to trade in a broad range with with US dollar and bond yields resulting in mixed trade. "While US dollar and bond yields remain key price determining factor, gold is supported by resurgence in virus cases, mixed economic data from major economies, selling pressure in Chinese equities and dovish stance of major central banks. The US dollar has also gained amid worsening outlook for European economies as rise in virus cases has forced countries to impose stricter restrictions while slow vaccine rollout also remains a cause of concern," the brokerage said.

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