Gold Prices Today: Yellow metal a tad down as fear of US rate hikes jitters investors

Gold has been declining for the last two weeks as hawkish comments by US Fed officials have raised expectations that the central bank is likely to increase interest rates at its upcoming meetings.

Gold prices in domestic and international markets fell as fears about more interest rate hikes by the US Federal Reserve dented the outlook for the yellow metal.

In both global and domestic markets, gold prices had fallen below their key price levels. On COMEX, the price of the yellow metal has fallen below the key figure of $2,000 per ounce, while on the Multi Commodity Exchange of India, the June gold contract has dipped below the psychologically important level of Rs 60,000 per 10 grams.

At 11.07 am, the COMEX gold price was at $1,988.30 per ounce, down 0.1 percent from the previous close. The June MCX contract was also 0.1 percent lower at Rs 59,787 per 10 grams.

Gold has been declining for the last two weeks as hawkish comments by US Fed officials have raised expectations that the central bank is likely to increase interest rates at its upcoming meetings. A rise in lending rates increases the opportunity cost of holding the yellow metal, which limits demand.

"Uncertainty over the path of interest rates, which should become much clearer over the next month or two, is driving the indecision we’re seeing in gold at the moment," Craig Erlam, senior market analyst at OANDA, UK, said in a note.

"Higher yields in recent weeks have stalled the rally toward record highs but traders are clearly in no mood to give up on the yellow metal. As things stand, dips are being bought and it will be interesting to see if we see the same on this occasion as well. Big support remains around $1,940-$1,960 (on COMEX)," said Erlam.

Gold prices had risen in March and moved near their all-time highs on the back of robust safe-haven demand as fears of a possible recession grew after the collapse of several banks in the US.

In the domestic markets, gold sales were muted on the occasion of Akshaya Tritya on Saturday as higher prices dampened demand for the yellow metal.

Jewellers expected a nearly 10 percent decline in sales volume on Akshaya Tritiya on a year-on-year basis due to the 20 percent rise in the price of gold since last year. Customers either made token purchases or went for lightweight jewellery on the auspicious occasion on April 22, according to a report by PTI.

According to Manoj Kumar Jain, director at Prithvi Finmart, the June gold contract on MCX has support at Rs 59,600-59,440 per 10 grams and resistance at Rs 60,060-60,300 per 10 grams.

"We suggest buying gold on dips around Rs 59,600 per 10 grams with a stop loss of Rs 59,330 for the target of Rs 60,060," said Jain.