Gold Prices Today: Yellow metal trades lower ahead of Akshaya Tritya, high prices weigh on demand

This Akshaya Tritiya buy gold by testing its purity and karatage of jewellery.

Gold was trading lower in the domestic market on April 22, a day ahead of Akshaya Tritya when buying the precious metal is considered auspicious, as high prices weighed on sentiment.

"We anticipate that this Akshaya Tritiya will be as lively as ever, but the traditional practice of purchasing physical gold may be subdued due to soaring gold prices, currently quoted at over Rs 60,000 per 10 grams, making it challenging for potential investors," said Pritam Patnaik, Head-Commodities, HNI & NRI Acquisitions, Axis Securities.

Akshaya Tritya is an annual Hindu spring festival. People usually buy jewellery or gold on the day as it is considered auspicious, generating more domestic demand for the yellow metal.

Domestic gold has touched record highs in recent weeks on the back of higher international rates. The collapse of several US banks, including Silicon Valley Bank in March, raised fears of a possible recession in the country, fanning safe-haven demand for the yellow metal.

On Comex, gold rose to near-record highs. Analysts expect prices to rise further and set new records as concerns about a global recession remain.

At 10.52 am, the June gold contract on the Multi Commodity Exchange of India was around Rs 60,380 for 10 grams, down 0.2 percent from the previous close. Comex gold was at $2,010.85 a troy ounce, down 0.4 percent.

Upbeat sentiment

Even with gold trading lower, sentiments in international markets remained upbeat due to a series of poor economic data from the US.

The Philadelphia Fed manufacturing index sank more than anticipated in April, while weekly jobless claims rose more than expected. US home sales also fell sharply in March, according to data.

This is expected to create a floor for gold prices on Comex above $2,000. Prices also have been rising as the market expects the US Federal Reserve to pause its interest-rate hike cycle soon.

Some analysts believe that even if Fed continue to raise interest rates at the upcoming policy meetings, it will be beneficial for gold in the long term.

Rising interest rates is expected to slowdown economic activities further in the US, pushing up safe-haven demand.

"The possibility of an impending recession, owing to extended periods of high-interest rates, failing banks, and the collapsing dollar index, has further added to the safe haven appeal of gold, reflected in the gold prices," Patnaik said.

"These factors could propel gold towards Rs 65,000 (on MCX) in the medium to long term," he added.

Prices today

Gold has support at $2,004-1,988 on Comex, while resistance at $2,035-2,050 per, Manoj Kumar Jain, director, Prithvi Finmart, said.

On MCX, gold has support at Rs 60,330-60,100 and resistance at Rs 60,720-60,880.

"We expect gold and silver prices to remain volatile in today’s session amid volatility in the dollar index and could hold its respective support levels," Jain added.

"Investors holding on to physical gold may continue to hold with a target of Rs 65,000. We recommend new investors buy on dips. Those looking for other gold-related instruments can opt for gold ETFs," said Patnaik.

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