However, an increase in US Treasury yields following hawkish meeting minutes released by the Federal Reserve offset demand for the precious metal’s safe haven amid rising cases of the Omicron variant.
MCX gold futures fell 0.42% or Rs 204 to Rs 47,817 for 10 grams. The money hit 1.27% or Rs 793 at Rs 61,445 per kg.
Investors view gold as a hedge against higher inflation, but the metal is very sensitive to rising US interest rates, which increases the opportunity cost of holding unproductive bullion.
Gold prices traded flat on Thursday, with ADP private payroll data in the United States showing growth in private payrolls, which limited the rise in gold prices. or during the previous session.
Prices reduced some of the gains under pressure from a firm dollar and strong US bond yields with heightened expectations of a rate hike. The increased risk of the Omicron virus spreading has kept the risk premium high in gold prices.
Gold prices are trading in a narrow range after the release of the minutes of the Federal Reserve’s December meeting signaled the possibility of earlier and faster rate hikes due to the increase in inflation, ”said Ravi Singh, vice president and head of research, ShareIndia.
Gold discounts in India have widened to multi-month highs as consumers in major Asian countries withhold their purchases during the year-end holidays due to new virus restrictions, which may delay wedding shopping.
On the spot market, the highest purity gold was sold at Rs 48,150 per 10 grams, while silver was priced at Rs 61,896 per kg on Wednesday, according to the Indian Bullion and Jewelers Association.
Spot gold prices returned to above Rs 48,000 in the market, showing some strength, while its counterpart Silver was unable to trade above Rs 62,000 per kg, highlighting the underperformance of white metal.
Vidit Garg, director of MyGoldKart, said gold dropped its full-day gains after the hawkish tone was reflected from the Fed and US bond yields rose after a long stretch, the dollar covering its losses.
“We expect gold prices to trade sideways higher for the day with COMEX spot gold support at $ 1,790 and resistance at $ 1,830 an ounce. MCX Gold support for February is at Rs 47,800 and resistance at Rs 48,400 per 10 grams, “said Tapan Patel, senior. Analyst (commodities), HDFC Securities.
Spot gold was little changed at $ 1,810.59 an ounce at 0142 GMT. US gold futures fell 0.8% to $ 1,810.00.
Spot silver was down 0.1% to $ 22.75 an ounce, platinum fell 0.2% to $ 980.53 and palladium was unchanged at $ 1,863.69.