Domestic gold prices suddenly dropped after reeling at nearly Rs 4,9180 in the initial trade, even as Indian equity benchmarks Sensex and Nifty began the Wednesday session with minor cuts. This came as spot gold prices lingered near recent lows even as investors prepared for the likelihood of another super-sized interest rate hike from the US Federal Reserve in its effort to tame soaring inflation.
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On MCX, Gold Futures were down by 0.1 percent to touch the intraday low of Rs 49,126 per 10 grams as of 9:45 am on Wednesday. It, however, gained 0.01 percent later to touch Rs 49,180. At the same time, Spot Gold was rallying at $1,664.38, not much lower than what it was two days ago when it had slid 0.7 percent to $1,663.55 an ounce
A day earlier, global gold prices had dropped as much as 1 percent as investors squared positions ahead of a widely expected large interest rate hike by the US Federal Reserve this week.
The Fed is expected to hike interest rates by at least 75 basis points after its two-day policy meeting on Wednesday, Reuters reported.
Meanwhile, Silver futures, however, gained 0.33 percent, surging to Rs 56,527 per kilogram - far below the lifetime.
Amid this, oil prices remained under pressure due to a further rise in the US bond yields, which lifted the dollar further. The dollar hovered near a two-decade peak against a basket of currencies on Wednesday, making oil more expensive for holders of other currencies.
The US Dollar Index Futures rallied at 110.013 after seeing a spike of 0.06 percent in trade. This led to the rupee falling by four paise from its previous close to close at 79.75 against the US dollar due to rising crude oil prices and a gain in the greenback overseas.
Rahul Kalantri, VP Commodities, Mehta Equities Ltd, said Gold has support at $1655-1648, while resistance is at $1676-1788. He also said Silver has support at $19.05-18.85, while resistance is at $19.42-19.55.
"In rupee terms, gold has support at Rs 49,040-48,880, while resistance is at Rs49,510, 49,660. Silver has support at Rs 55,750-55,240, while resistance is at Rs 57,180–57,510," Kalantri said.