Gold Prices Defy International Gold Rate; Still Hold Below Rs. 47000

Gold prices in the international market continued to gain on Federal Reserve's Powell testimony that the accommodative stance shall continue as the economy needs support.
Spot gold rose 0.2% to $1,809.17 per ounce by 0111 GMT, having hit its highest since Feb. 16 at $1,815.63 on Tuesday. U.S. gold futures gained 0.1% to $1,807.30.

Gold Prices Defy International Gold Rate; Still Hold Below Rs. 47000

On the comments, US treasury yield saw a decline. Easy or loose monetary policy tends to weigh on government yields and thus makes gold more attractive. Notably, also the policymaker ebber inflation fears, saying that the price increase is unlikely to be large or persistent.

In the domestic market, gold prices on the MCX for April delivery still hold below Rs. 47000 and was in fact down by a margin and trading at Rs. 46780 per 10 gm. Silver on the other hand was up by over Rs. 139 at Rs. 69480 per kg,

Gold has lost a good Rs. 9000 per 10 gm in over six months

Since the record highs, gold price has fallen by a record Rs. 9000 as there is a concern of inflation on loose monetary policy as due to inflation there is an upward push to lending rates.

"The biggest factor weighing on gold price is higher US and global bond yields. Gold yields no interest hence higher returns from bonds is negative for prices. Rising yields reflect increasing optimism about health of US economy amid vaccination progress and hopes of additional US stimulus. Higher yields however also reflect increased inflation and interest rate hike expectations. The recent inflation data from major economies also points towards increasing price pressure. Rising commodity prices has also added to inflation expectations. While higher yields has pressurized gold, the metal is also considered a hedge against inflation," Kotak Securities said in a note.

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