The dollar hovered near recent 20-year highs, making greenback-priced bullion less attractive for other currency holders. Market participants will be keeping a close eye on US consumer price index (CPI) data for April due later in the day.
Gold futures on
were trading lower by 0.45 per cent or Rs 226 down at Rs 50,360 per 10 grams. However, silver futures dropped about 0.53 per cent or Rs 319 to Rs 60,299 per kg.
US inflation data due today will be watched to gauge its likely impact on the Fed‘s rate hike plan, said Ravi Singh, Vice President and Head of Research, ShareIndia.
“The strength in the dollar is also putting pressure on gold prices and the Fed’s aim of bringing inflation down without derailing the economy is challenging amid this uncertainty caused by the Russia and Ukraine war,” he added.
Gold is seen as a hedge against inflation and a safe store of value during times of political and economic crises but is highly sensitive to rising short-term US interest rates, which raise the opportunity cost of holding zero-yield bullion.
Rahul Kalantri, VP Commodities, Mehta Equities said gold and silver prices continued to deteriorate despite some relief seen in the US dollar and US bond yields.
“Gold and silver prices crashed after the US Federal Reserve member said aggressive interest rate hikes could be undertaken to control inflation,” he added. “However, bullion prices might show some recovery from the bottom.”
In the spot market, the highest purity gold was sold at Rs 51,496 per 10 grams while silver was priced at Rs 61,473 per kg on Tuesday, according to the Indian Bullion and Jewellers Association.
The spot prices of gold have dropped more than Rs 1,000 per 10 grams in the last one month, whereas silver has plunged about Rs 6,200 per kg in the same period under review.
“We expect gold prices to trade sideways to down for the day with COMEX Spot gold support at $,1810 and resistance at $1,850 per ounce.
Gold June support lies at Rs 50,300 per 10 gram and resistance at Rs 50,900 per 10 gram,” said Tapan Patel, Senior Analyst (Commodities), HDFC Securities.
Spot gold was down 0.3 per cent at $1,832.06 per ounce, as of 0046 GMT. US gold futures fell 0.5 per cent to $1,832.10. Gold prices fell for a third consecutive session to hit their lowest level since February 11.
Spot silver dipped 0.1 per cent to $21.23 per ounce, while platinum edged higher 0.1 per cent to $964.64, and palladium fell 1.2 per cent to $2,040.25.