Bullion, seen as a safe store of value during times of economic crises, tends to become less attractive to investors when US interest rates are raised because it yields no interest.
Gold futures on
were trading marginally higher by 0.28 per cent or Rs 142 up at Rs 50,971 per 10 grams. However, Silver futures jumped about 0.26 per cent or Rs 218 at Rs 61,625 per kg.
Rahul Kalantri, VP Commodities, Mehta Equities said that gold prices snapped a four-week losing trend, managing to close on a higher note.
“Bullion prices also got support from weak US data. Unemployment claims rose again and existing home sales and the Philly Fed manufacturing index also disappointed,” he added.
As bullion yields no interest it can become less attractive to investors when short-term US interest rates are hiked. It is, however, seen as a safe store of value during times of economic crises.
Asian stocks faced an uncertain start on Monday as inflation fears and the prospect of rising interest rates dogged the global economic outlook.
In the spot market, highest purity gold was sold at Rs 51,027 per 10 grams while silver was priced at Rs 62,004 per kg on Friday, according to the Indian Bullion and Jewellers Association.
The spot prices of gold have topped Rs 51,000 mark per 10 grams after a week, whereas the silver has hit Rs 62,000 per kg after more than two weeks.
US housing, labour, and regional manufacturing indices data this week failed to meet market expectations putting pressure on dollar index and treasury yields, said Ravi Singh, Vice President and Head of Research, ShareIndia.
“Central banks across the globe are under pressure to act to get inflation under control. Gold prices have rebounded from low to gain some strength,” he added.
“We expect gold prices to trade up with COMEX Spot gold support at $1,820 and resistance at $1,870 per ounce. MCX Gold June support lies at Rs 50,600 and resistance at Rs 51,200 per 10 gram,” Tapan Patel, Senior Analyst (Commodities),
Spot gold rose 0.2 per cent to $1,848.96 per ounce, by 0201 GMT. Prices hit their highest since May 12 at $1,853.55 earlier in the session. US gold futures gained 0.4 per cent to $1,847.90.
Spot silver gained 0.4 per cent to $21.84 per ounce, platinum firmed 0.3 per cent to $958.10, and palladium climbed 0.7 per cent to $1,978.45.
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