Gold prices fell on Friday, September 22, 2023, as the US dollar strengthened to a six-month high against a basket of major currencies, following the Federal Reserve’s hawkish stance on monetary policy and upbeat outlook for the US economy. Silver prices, however, remained unchanged amid mixed signals from the global market.
Also Read: Gold Price Surges to Record High as Silver Slumps Amid Global Uncertainty
Gold loses shine as the Dollar gains
The price of 24-carat gold dipped Rs 180 during Friday’s early trade, with ten grams of the precious metal selling at Rs 60,050, according to the GoodReturns website. On Thursday, gold had closed at Rs 60,230 per 10 grams. Similarly, the price of 22-carat gold also declined by Rs 180 to Rs 58,850 per 10 grams from Rs 59,030 per 10 grams in the previous session.
In the international market, spot gold was trading 0.3% lower at $1,926.06 per ounce, after hitting a one-week low of $1,919.57 earlier in the session. US gold futures were down 0.4% at $1,929.40 per ounce.
The main reason behind the fall in gold prices was the appreciation of the US dollar, which rose to a six-month high of 105.39 against a basket of six major currencies on Thursday. The dollar index was last seen trading at 105.32, up 0.1% on the day.
The dollar gained strength after the Federal Reserve announced on Wednesday that it would start tapering its monthly bond purchases by $15 billion in November and end them by mid-2023, sooner than expected by many analysts. The Fed also signaled that it could raise interest rates as soon as next year, depending on the inflation and employment situation in the US.
The Fed’s hawkish stance boosted the US Treasury yields, which rose to their highest levels since June. The yield on the benchmark 10-year note climbed to 4.49% on Thursday, up from 4.35% before the Fed’s announcement. Higher yields increase the opportunity cost of holding non-interest-bearing assets such as gold.
The Fed also upgraded its economic projections for the US, expecting a faster recovery from the pandemic-induced recession. The Fed now expects the US gross domestic product (GDP) to grow by 6% in 2023, up from 5.9% in June. It also expects the unemployment rate to fall to 4.8% by the end of this year, down from 5.2% in June.
Silver holds steady amid mixed cues
Silver prices, on the other hand, remained unchanged on Friday, with one kilogram of the white metal selling at Rs 74,500, according to the GoodReturns website. On Thursday, silver had closed at Rs 74,500 per kg.
In the international market, spot silver was trading flat at $23.20 per ounce, while US silver futures were up 0.1% at $23.25 per ounce.
Silver prices were supported by some positive factors such as strong industrial demand and geopolitical tensions. Silver is widely used in various sectors such as electronics, solar panels, medical equipment, and jewelry.
According to a report by Metals Focus, a London-based consultancy firm, global silver demand is expected to rise by 15% in 2023 to reach a six-year high of 1.02 billion ounces. The report said that industrial demand for silver would increase by 8% to account for more than half of the total demand.
Silver prices were also underpinned by the ongoing tensions between China and Taiwan, which raised concerns over a possible military conflict in the region. China has been increasing its military activities near Taiwan’s airspace and waters, prompting Taiwan to seek more support from its allies such as the US and Japan.
Outlook for Gold and Silver
Analysts have mixed views on the outlook for gold and silver prices in the near term. Some expect further downside pressure on gold due to a stronger dollar and higher yields, while others see some scope for recovery due to bargain hunting and safe-haven demand.
Anuj Gupta, Head of Commodity and Currency at HDFC Securities, said that gold prices could test Rs 58,000 per 10 grams in the domestic market and $1,900 per ounce in the international market in the coming days.
Praveen Singh, Associate VP, Fundamental Currencies and Commodities at Sharekhan by BNP Paribas, said that gold prices could bounce back to Rs 60,500 per 10 grams and $1,950 per ounce if they find support at Rs 58,500 per 10 grams and $1,910 per ounce respectively.
Amit Khare, Associate Vice President at GCL Broking, said that silver prices could trade in a range of Rs 72,000-Rs 76,000 per kg in the domestic market and $22.50-$24.00 per ounce in the international market in the near term.
This post Gold prices plunge as dollar surges to six-month high; silver remains steady was originally published at Finance Crave
Comments
Post a Comment