Gold price fell to a four-month low on Monday on the back of stronger-than-expected US jobs market report and amid bets that the US Federal Reserve may soon start a rollback of its massive monetary stimulus. Gold price in Delhi was down ₹317 at ₹45,391 for every 10 gram in line with a fall in international precious metal prices. Gold closed at ₹45,708 per 10 gram in the previous trade. Silver also tumbled ₹1,128 to ₹62,572 per kg, from ₹63,700 per kg in the previous trade.
Nish Bhatt, founder and CEO of Millwood Kane International, said US jobs data and stronger dollar pushed the gold price up. “Gold prices have been on a downward trend. It has lost around 1% in today’s trade and almost ₹2,000 in value in the last two weeks. The latest US jobs data released was better than expected. It led to a boost in US Dollar and Treasury yields. A stronger dollar makes gold expensive,” Bhatt said.
Bhatt said that the US jobs data also fuelled the belief that US Fed may start tightening the monetary policy earlier than expected. He explained that high-interest rates reduce the appeal for investment in gold.
“Also, an expectation of a quicker recovery in the US and global economy will reduce uncertainties and thereby investor’s appetite for gold,” he said. “Rising inflation in some countries may force their respective central bank to tighten monetary policy, raise rates. Going forward, the way countries control the spread of new variants of the virus, recovery in the global economy, the pace at which global central banks unwind their easy monetary policy regime will guide gold prices.”
Navneet Damani, vice president of commodities research at Motilal Oswal Financial Services, echoed Bhatt’s sentiments.“Gold extended its fall, along with silver after a stronger than expected US jobs report on Friday which fueled the bets that the Fed may start paring back its massive monetary stimulus soon. The dollar and benchmark 10-year Treasury yields jumped after the data, denting non-yielding gold’s appeal,” Damani said. “Market participants worry that the U.S. economic recovery and rising inflation might spur the Fed to pull back on unprecedented economic support,” he added.
Damani said investing in the Sovereign Gold Bond (SGB), which opened for subscription for five days from Monday, will be good. “It is advised to invest in SGB or any other platform available like ETF or Digital gold based on one’s risk appetite. The broader range on COMEX could be between $1720- 1775 and on the domestic front prices could hover in the range of ₹45,800- 46,335.”
Gold was trading lower at $1,749 per ounce and silver also dipped marginally to $23.91 per ounce in the international market. Gold regained most of its losses but remains under pressure. Falkmar Butgereit, a senior trader at refiner Heraeus Metals Germany GmbH & Co KG said gold “recovered in the course of trading as bargain hunters took advantage of the low price to enter the market”. Butgereit added that “many investors now fear that the Fed will soon start tapering bond purchases, raising expectations of interest rate hikes in 2022/2023,” according to Bloomberg.
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