Gold prices today drop below Rs 49,000 ahead of US Fed decision

NEW DELHI: Gold futures prices in the domestic market traded with cuts in the morning trade on Tuesday, ahead of the US Federal Reserve’s monetary policy decision due later in the day and as investors awaited a stimulus package in the world’s largest economy.

Losses were checked by efforts of Democrats in the US Senate who said they will move forward on US President Joe Biden’s $1.9 trillion coronavirus relief plan without Republican support if necessary, Senate Democratic leader Chuck Schumer said on Tuesday. Gold is considered a hedge against inflation, likely from widespread stimulus.

Gold futures on MCX were down 0.60 per cent or Rs 293 at Rs 48,850 per 10 grams. Silver futures dropped 0.63 per cent or Rs 418 to Rs 66,117 per kg.

“COMEX gold trades 0.3 per cent lower near $1,845/oz after a 0.2 per cent decline yesterday. Gold is pressurized by increasing debate about the US stimulus package and position squaring ahead of the Fed’s monetary policy meeting. ETF outflows also show lack of investor interest. However, supporting price is rising virus cases and drop in bond yields and rise in Chinese imports last month,” said Ravindra Rao, VP- Head Commodity Research at Kotak Securities.

In the spot market, Gold prices in the national capital fell Rs 141 to Rs 48,509 per 10 grams on Monday, continuing the previous day’s weakness. Silver, however, gained marginally by Rs 43 to Rs 66,019 per kg.

Trading strategy

“Gold may witness choppy trade unless there are fresh triggers but general bias may be on upside on hopes of US stimulus and expectations that the Fed may maintain accommodative stance,” said Rao.

Global markets

Gold prices held steady on Wednesday. Spot gold was little changed at $1,849.76 per ounce. US gold futures eased 0.1 per cent to $1,848.60. Holdings of the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, fell 0.1 per cent to 1,172.38 tonnes on Tuesday.

Silver was flat at $25.43 an ounce, platinum rose 0.1 per cent to $1,099.68, and palladium gained 0.1 per cent at $2,326.30.

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