Gold prices today fall below Rs 48,700 tracking international market

Gold and silver futures prices in the domestic market traded with cuts in the morning trade on Thursday, as the dollar hit a more than a week high mark against rival currencies in the previous session. A stronger dollar makes gold more expensive for holders of other currencies, Economictimes reported.

Meanwhile, the Fed on Wednesday left its key overnight interest rate near zero and made no change to its monthly bond purchases, pledging again to keep those economic pillars in place until there is a full rebound from the pandemic-triggered recession.

Gold futures on MCX were down 0.36 per cent or Rs 177 at Rs 48,688 per 10 grams. Silver futures dropped 1 per cent or Rs 666 to Rs 65,870 per kg.

“COMEX gold trades 0.5 per cent lower near $1,835/oz after a 0.3 per cent decline yesterday. Gold weakened as the Fed painted a downbeat outlook for the US economy but did not hint towards additional measures. Fed’s downbeat growth outlook and ECB’s willingness to cut rates pushed the US dollar higher putting pressure on gold. ETF outflows also showed weaker investor interest,” said Ravindra Rao, VP- Head Commodity Research at Kotak Securities.

Daily Gold Price (Today January 29): Short-term outlook, Forecast and Updates
Source: Good Returns website

According to Good Returns website, 22k gold price in Delhi today stands at Rs 47,890. In Mumbai, the price of gold is Rs 45,740 per 10 grams.

Trading strategy

“Gold has come under pressure but we may not see sustained decline as US economic outlook and stimulus expectations may limit upside in the US dollar,” said Rao.

Global markets

Gold prices edged lower on Thursday as investors opted for the safety of the dollar after the US Federal Reserve flagged concerns about the pace of recovery in the world's largest economy.

Spot gold eased 0.3 per cent to $1,839.21 per ounce by 0042 GMT. Prices fell to their lowest since Jan. 18 at $1,830.80 on Wednesday. US gold futures shed 0.5 per cent to $1,835.90.

Silver lost 0.2 per cent to $25.18 an ounce, platinum fell 0.2 per cent to $1,063.76, and palladium was flat at $2,304.81.

Gold Price Analysis: XAU/USD eyes key $1831 support after benign Fed – Confluence Detector

Gold (XAU/USD) wavers below $1850, consolidating the Fed-led downside, as traders await the US Q4 advance GDP release for a fresh direction, said Fxstreet.

Gold lost ground once again on Wednesday after the Fed left its key rates unchanged while maintaining the current bond-buying at $120 billion per month. Benign Fed and mounting tensions over the covid surge knocked-of the stocks and boosted the safe-haven demand for the US dollar.

Let’s take a look at the key technical levels for trading gold in the day ahead.

Gold Price Chart: Key resistances and supports

The Technical Confluences Indicator shows that gold is challenging immediate support at $1836, which is the confluence of the previous low one-hour and Fibonacci 23.6% one-day.

The bears need acceptance below the critical $1831 cushion, where the previous low one-day, Fibonacci 61.8% one-week and pivot point one-day S1.

The next downside target is seen at the Fibonacci 61.8% one-month at $1827. A sharp sell-off below the latter cannot be ruled out, exposing powerful support at $1817, the pivot point one-month S1.

Alternatively, the bulls face a dense cluster of resistance levels around $1842, above which the Fibonacci 61.8% one-day at $1845 guards the upside.

Further up, it is likely to be an uphill task for the XAU bulls until the Fibonacci 38.2% one-month at $1857 is scaled on a sustained basis.

Price of Gold Fundamental Daily Forecast – Weakens After Fed Comes in Less-Dovish Than Expected

Since 10-year Treasury yields inched higher after the Fed announcement, investors didn’t see the news as particularly dovish, according to Fxempire.

Gold futures are trading about $5.00 lower since the Federal Reserve made its monetary policy announcements at 19:00 GMT. The market is also up about $11.00 from its intraday low at $1832.40. Immediately after the Fed news, the market shot up at $1855.70 before retreating to $1843.00.

I mention the price action because the business news websites want you to believe the Fed drove the gold market to a more than one-week low on Wednesday, but that’s not how it happened. This is just further evidence that you have to match the news to the price swings in order to understand the catalyst driving the price action.

CNBC wrote, “Gold prices fell to a more than one-week low on Wednesday, pressured by concerns over the U.S. stimulus bill and strength in the dollar after the Federal Reserve left interest rates unchanged.”

Gold fell to its low of the session at 15:00 GMT at $1832.40. When the Fed released its statement at 19:00 GMT, April Comex gold was trading $1848.50. At 19:05 GMT, the market hit a high of $1851.40 before tumbling to $1842.70 at 20:15 GMT.

Dollar Rises on Economic Impact of COVID-19 Pandemic Fears; ECB Warning

The U.S. Dollar is up on Wednesday as investors turned more cautious on riskier assets amid growing worries about the economic impact of the COVID-19 pandemic and as a downward revision to Germany’s growth forecast weighed on the Euro.

The Euro was pressured after the German government on Wednesday slashed its growth forecast for Europe’s largest economy to 3% this year, a sharp revision from last autumn’s estimate of 4.4%, caused by a second coronavirus lockdown.

The single-currency was also under pressure after a European Central Bank official said the bank was monitoring the currency closely. ECB governing council member Klaas Knot said the central bank has room to cut its deposit rate further, should it be necessary to improve financing conditions and reach its inflation target.

Knot’s comment constituted the most explicit hit to date from an ECB policymaker about the possibility of a rate cut to stem a rally in the Euro – a move that seemed highly unlikely until recently.

Fed Stays Consistent With Market Expectations

The policymaking Federal Open Market Committee said Wednesday it was keeping its benchmark short-term borrowing rate anchored near zero and maintaining an asset purchasing program that is seeing the Fed buy at least $120 billion a month.

Short-Term Forecast

Easy monetary policy tends to weigh on government bond yields, increasing the appeal of non-yielding gold. Since 10-year Treasury yields inched higher after the Fed announcement, investors didn’t see the news as particularly dovish.

In order to attract new buyers into gold, the Fed will need to adopt a more dovish tone, which will push yields back below 1%. Furthermore, if Biden manages to get his $1.9 trillion stimulus package passed by Congress, inflation could shoot higher. This would likely drive Treasury yields higher, and keep the downward pressure on gold.

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