IGI Logo

Below is quote on Investors of precious metals jittered over rate hike clues By Mr. Abhishek Chauhan , Head Commodity and Currency, Swastika Investmart Ltd.

Fed's minutes were released last week, after which there was a sharp fall in the prices of gold and silver. US bond yields and the dollar remained at their higher levels with gains. In Comex futures, gold prices fell more than 2 percent last week and its price was at $1790 an ounce. Comex futures silver declined by more than 5 percent and its price touched as low as $22. Fed officials said the rate hike could happen sooner and possibly at a faster pace than they had previously expected because inflation is on the rise. Rate hike is widely expected in Fed’s upcoming meeting to be held on March 2022.

The Fed indicated that policymakers are looking to cut the central bank's $8.9 trillion balance sheet more aggressively than last time. Given the large fall in the precious metals, gold appears to still be vulnerable to higher bond yields and a bullish dollar. Gold and silver prices have remained unsupported despite a steady rise in crude oil prices and a rise in Omicron's case, raising the possibility of further pressure.

US weekly jobless claims, which climbed from 7000 to 207,000 in a week, and the figure on the US trade deficit rose to $80.2 billion in November from $67.2 billion in the previous month. The Fed is expecting its rate hike to rein in inflation, growing fastest in 40 years in the United States. News of the rate hike is always bad for precious metals prices, which reflects this last year as it closed down 3.6% in 2021 for its first annual dip in three years and sharpest slump since 2015.

In the Comex division, Gold has support at 1780$ below this level it may increase selling momentum towards 1750 levels. Upside is expected only above 1835$. Silver has support at 22$ and selling pressure is likely to increase below this levels. It has resistance at 23$.In MCX, Gold has support at 46800 and Resistance at 49000. Silver has support at 58800 and resistance at 61000.

Above views are of the author and not of the website kindly read disclaimer