Gold Prices Today: Impending rate hike by Fed, high US yields, strong dollar to keep yellow metal volatile

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Gold prices hovered near a four-week low on Tuesday in international markets as a strong dollar countered safe-haven demand fuelled by economic slowdown fears amid prospects of aggressive monetary policy tightening.

Spot gold was up 0.3% at $1,823.69 per ounce, as of 0057 GMT, after falling to its lowest since May 19 at $1,810.90 earlier in the session. US gold futures fell 0.4% to $1,825.20.

At 9.45 am, gold contracts were trading 0.27 percent lower at Rs 50,527 for 10 grams on the Multi-Commodity Exchange (MCX), while silver shed 0.35 percent to Rs 60,100 a kilogram.

Precious metals gave up all the gain of last day ahead of two day Fed meeting starting today. The dollar, which moves opposite to gold prices, gained 0.86% in the previous session while the US benchmark treasury yield gained 6%, putting pressure on precious metals prices. The US inflation data rose to 8.6%, a fresh 40-year higher level that suggests an aggressive rate hike. However, higher energy costs are supporting gold prices at lower levels. Rangebound to volatile movement is expected in precious metals today while upper range witnesses a selling pressure. Gold has resistance at Rs 51000 and support at Rs 50300. Silver has resistance at Rs 61000 and support at Rs 59400, said Nirpendra Yadav, Senior Commodity Research Analyst, Swastika Investmart.

Gold prices traded firm on Tuesday with spot gold prices at COMEX 0.43% up near $1827 per ounce in morning trade. Gold prices halted decline as the dollar index fell back below 105 after rallying sharply in previous trading. The surge in US bond yields may keep upside limited as they are trading near 3.37%. The expectations of a larger than expected rate hike from Fed led to selling in precious metals along with riskier assets on dollar rally.

We expect gold prices to trade sideways to down for the day with COMEX spot gold support at $1810 and resistance at $1840 per ounce. MCX gold August support lies at Rs 50300 and resistance at Rs 51000 per 10 grams.