Gold price dives to 4-month low on concerns of early Fed tapering

Gold price dives to 4-month low on concerns of early Fed tapering

As of 11:15 a.m. ET, gold was down 2.0% to $1,728.04 per ounce, the lowest since early April. US gold futures also declined 1.9% to $1,729.30 per ounce.

Silver, too, took a tumble as it dropped by as much as 7.5%, hitting a more than 8-month low of $22.50 per ounce earlier in the session. It was last down 3.7% to $23.44 per ounce.

[Click here for an interactive chart of gold prices]

Data released by the US Labor Department on Friday showed employers hired the most workers in nearly a year in July and continued to raise wages.

That underscored remarks by Fed officials suggesting a sooner-than-anticipated rollback of the pandemic era stimulus on the back of a solid labour market recovery.

The jobs data “beat expectations by a mile last week, which led to both gold and silver selling off into the close. This morning we are seeing the overhang of that as perhaps those traders a bit late to the party are panic-selling the open,” John Feeney, business development manager at Guardian Vaults, said in a Bloomberg interview, adding:

“With low liquidity at this time of the week combining with a large number of stop losses being triggered we have seen a volatile open to start the week.”

The technical picture does not look good for gold and short-term negativity is likely to continue, Harshal Barot, a senior research consultant for South Asia at Metals Focus, told Reuters.

However, “the pandemic is not truly behind us… There will be investors who will be looking for these levels to buy up gold as a protection,” Barot added.

The jobs data helped lift the benchmark US 10-year treasury yields in the process, hurting gold’s appeal as an inflation hedge. Meanwhile, the dollar index also hit a two-week high on Monday, pulling investors towards the greenback.

Gold has been losing ground on investor concern that an improving US economy and rising inflation will spur the Fed to pull back on unprecedented economic support.

Low rates help make bullion more competitive against assets that offer yields, while the strengthening dollar and record equity markets are also curbing demand for the haven metal.

(With files from Bloomberg and Reuters)

Gold prices crash today, plunge to 4-month low, silver rates slump

Gold and silver prices continued to skid in India, tracking a global selloff in precious metals. On MCX, gold futures fell 1.3% or ₹600 to a four-month low of ₹46,029 per 10 gram while silver shed 1.6% or ₹1,000 to ₹63,983 per kg. In the previous session, gold and silver had plunged about ₹1,000 and ₹2,000 respectively.

In global markets, gold rates slumped as much as 4.4% today as better-than-expected US jobs data fueled fears that the Federal Reserve would raises rates quicker than expected. Spot gold were down 2.3% to $1,722.06 per ounce after touched $1,684.37 earlier in the session. Silver was down down 2.6% at $23.70 after slumping much as 7.5% earlier in the session.

“Weak bias for gold is likely to continue while prices stay below $1,788. Next major support is seen at $1,665 a direct drop of which is a short term bearish signal. Likewise, it required to break above $1,835 to trigger recovery rallies in the counter,” domestic brokerage Geojit said in a note.

Data released on Friday showed, US employers hired the most workers in nearly a year in July and continued to raise wages. The data boosted the dollar and benchmark US. 10-year Treasury yields, hurting gold’s appeal as an inflation hedge.

Weak ETF flows also weighed on gold. Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell to 1,025.28 tonnes on Friday, from 1,027.61 tonnes on Thursday.

Gold has been under pressure this month on investor concern that an improving US economy and rising inflation will spur the Fed to pull back on unprecedented economic support.

“The U.S. Dollar Index gained strong upside momentum after Non Farm Payrolls report indicated that U.S. economy added 943,000 jobs in July. Meanwhile, Treasury yields are moving higher as traders bet that Fed would cut its asset purchase program in 2021. Also, Gold/Silver ratio also moved higher, back to previous week’s high level, settled near 7 2.45 this week. That is also bearish sign for silver price,” CapitalVia Investment Advisor said in a report.

The US Labor Department on Friday said nonfarm payrolls rose by 943,000 jobs last month, beating the forecast of economists in a Reuters poll. Job gains for June and May also were revised higher.

Many Fed officials, including Vice Chair Richard Clarida, had earlier said that they could envision a reduction in the central bank’s purchases of Treasuries and mortgage-backed securities if the job gains accelerated.

In India, Sovereign Gold Bond Scheme 2021-22 - Series V opened for subscription today. The issue price of the bond - at ₹4,790 per gram - is based on the simple average closing price as published by the India Bullion and Jewellers Association for gold of 999 purity of the last three business days of the week preceding the subscription period, from August 04, August 05 to August 06, 2021. Investors applying online and making payment online get a discount of ₹50 per gram.

(With Agency Inputs)

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Gold Price Today: Yellow Metal Sees Sharp Fall Universally

Gold Price Today: Yellow metal price fell sharply in domestic markets and also globally

Yellow metal prices on Monday fell on the MCX as well as in the global markets, as gold October futures plunged by 2.52 per cent to reach Rs 46,640 per 10 gram mainly due to rupee appreciation.

Globally too, gold fell by as much as 4.4 per cent to a more than four-month low as robust US jobs data stoked concerns of a sooner-than-expected interest rate hike, which could increase the opportunity cost of holding non-interest bearing bullion.

Also silver September futures on the MCX fell by 4.20 per cent to reach Rs 65,000 per kg. On the COMEX, silver prices declined by 4.5 per cent to trade at $24.33 per ounce for the week.

Gold prices fell to touch $1,763 per ounce for the week, which was its worst fall in the last four months.

“COMEX gold witnessed a volatile start to the week. Price hit a session low of $1677.9 per ounce and is currently trading 1.4 per cent lower near $1738 per ounce. The snap reaction can be attributed to lower trading volumes amid holidays in Japan, Singapore. Weighing on gold price is increased expectations of Fed’s monetary tightening post US non-farm payrolls data and some hawkish comments by Fed officials. ETF outflows also show weaker investor interest amid continuing firmness in equities. However, rising virus cases and increased geopolitical tensions have lent some support. Gold may remain under pressure as market players react to US non-farm payrolls report,” said Ravindra Rao, Head Commodity Research with Kotak Securities.