Gold prices rose in international and domestic markets as the yields on US Treasury bills declined, lifting demand for the precious metals, analysts said.
A fall in bond yields makes gold more attractive for investors.
The ten-year yields have slipped 1.60 basis points to 3.40 percent, which is pressurising the US dollar and supporting gold prices, said Praveen Singh, currencies and commodities analyst at Sharekhan by BNP Paribas.
A weaker dollar makes commodities such as gold and silver cheaper for holders of other currencies, lifting demand for the metals.
“Market participants look forward to tomorrow's US CPI data, which may offer more clues to the interest rate path that the Federal Reserve may follow, though markets are frantically creating, adjusting, fine-tuning and scraping their own narratives of the Federal Reserve's policy going forward,” Singh said.
At 10.33 am, the gold price on COMEX was at 2,014.75 per ounce, up 0.5 percent from the previous close, while the June gold contract on Multi Commodity Exchange of India (MCX) was around Rs 60,373 per 10 grams, up 0.5 percent.
The US consumer price index data for last month will be released on April 12. If inflation in March declines as compared with February, it may point to a slowing down of the economy. This raises prospects of the US Fed pausing its rate-hike cycle at the next policy meeting.
“We expect gold and silver prices to remain volatile this week ahead of the US inflation data and gold could hold its support level of $1984 per troy ounce (on COMEX),” Manoj Kumar Jain, director at Prithvi Finmart, said. Gold has support at $1,992-$1,984, while resistance at $2,014-$2,026 per ounce, according to Jain.
“On MCX, gold is having support at Rs 59,900-59,660 and resistance at Rs 60,280-60,550, while silver is having support at Rs 73,850-73,220 and resistance at Rs 74,800-75,200” Jain said.
Additionally, investors will also be waiting for the release of the minutes from the US Fed’s last policy meeting to gauge the central bank’s stance on monetary policy and rate hikes going forward.
In Indian spot markets, demand for gold has been robust since March, and is expected to remain strong in the coming weeks.
"Consumer demand has been strong in the March quarter, fuelled by upcoming Akshaya Tritiya festival. Hallmarking has come into effect from April 1 and the charge is Rs 45 per article, which is very small so that won’t affect demand. Like the industry, we also expect gold to reach Rs 70,000 by year end," said Mangesh Chauhan, chairman and managing director, Sky Gold.
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