Domestic gold moved in a tight range on Friday tracking the global benchmark as a rising dollar made the yellow metal less attractive for holders of other currencies. Weakness in equities, however, hurt investors' risk appetite, keeping losses in gold in check.
At 2:40 pm, the December gold futures contract on MCX was at Rs 46,435 per 10 grams, down 0.2 percent or Rs 86 compared with its previous close of Rs 46,521 per 10 grams.
Silver December futures were up by Rs 192 or 0.3 percent at Rs 59,809 per kilogram compared with their previous close of Rs 59,617.0 per kilogram.
Globally, gold eased but managed to hold above pivotal technical support at $1,750 per ounce, and was on track to post a small weekly gain amid concerns about rising inflation and growth. Spot gold was last seen trading down 0.2 percent at $1,754.2 per ounce, while US gold futures were at $1,754.5 per ounce. Spot silver was up 0.1 percent at $22.2 per ounce.
The rupee depreciated by 12 paise to 74.35 against the dollar on Friday. The greenback held close to its highest level of the year, making gold more expensive in other currencies.
Domestic equity benchmarks Sensex and Nifty50 were on track to close lower for the fourth day in a row. Weakness in securities typically boost the safe-haven allure of precious metals. Catch LIVE Updates here
"Gold has witnessed sharp short covering as bargain hunters stepped into buying after the Federal Reserve Chair mentioned that the US is still far from full employment," said Sandeep Matta, Founder of TRADEIT Investment Advisor.
That has helped regain the key level of $1,750 per ounce, and also stopped bears from taking it to the $1,700 per ounce mark, he said.
Gold is often considered a hedge against higher inflation, but a Fed rate hike would increase the opportunity cost of holding gold, which pays no interest.
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Matta sees a buy zone above Rs 46,325 for a target of Rs 46,700-47,000, and a sell zone below Rs 46,300 for a target of Rs 46,100-45,900.
The expectation of tightening of bond-buying in the US is keeping a check on fresh buying, said Ravi Singh, Vice President and Head of Research at ShareIndia.