Gold, silver prices fall on expectations of tighter monetary policy

Gold and silver futures declined on MCX and Comex as rising US bond yields and a stronger dollar weighed on prices

Gold and silver prices opened lower on Tuesday, November 3, as expectations of further monetary tightening in the US weighed on precious metals.

 

Gold and silver had recovered on Monday, the first trading day of the week. However, estimates released on Tuesday morning indicated a 73 per cent probability of the Federal Reserve raising interest rates in December, suggesting that investors continue to expect tighter monetary policy.

 

In the global market, gold futures on Comex were trading near $3,960 per ounce, while silver was trading near $50 per ounce. In the domestic market, gold futures on the Multi Commodity Exchange (MCX) were trading near ₹1,39,150 per 10 gram at the time of writing, while silver futures were trading near ₹1,80,250 per kg.

Gold prices fall

Gold futures opened lower. On the MCX, the benchmark December gold contract opened ₹766 lower at ₹1,39,420 per 10 gram. The previous close was ₹1,40,186.

 

At the time of writing, the contract was trading ₹1,018 lower at ₹1,39,168.

 

Gold futures had touched a high of ₹1,80,779 per 10 gram earlier this year.

Silver also slips

Silver futures also opened lower. On the MCX, the benchmark December silver contract opened ₹892 lower at ₹1,82,887 per kg. The previous close was ₹1,83,779.

 

At the time of writing, the contract was trading ₹3,524 lower at ₹1,80,255.

 

Silver futures had touched a high of ₹4,20,048 per kg earlier this year.

Gold, silver weak in global market

Gold and silver were trading lower in the international market.

 

On Comex, gold opened at $3,960.50 per ounce. The previous closing price was $3,969.60. At the time of writing, it was trading $16.10 lower at $3,953.50 per ounce.

 

Gold prices had touched a high of $5,586.20 per ounce earlier this year.

 

Comex silver futures opened at $50.74 per ounce. The previous closing price was $50.88. At the time of writing, it was trading $0.80 lower at $50.08 per ounce.

 

Silver prices had touched a high of $121.79 per ounce earlier this year.

Levels to watch

According to Ajay Kedia, director, Kedia Advisory, gold has immediate support at ₹1,38,640, followed by ₹1,37,090.

 

Resistance is seen at ₹1,41,130. If prices sustain above this level, the recovery could extend towards ₹1,42,070. A break below immediate support could increase selling pressure.

 

For silver, the technical data placed immediate support at ₹1,81,100, followed by ₹1,78,420. However, the current price quoted in the report, at ₹1,80,255, is already below the first support level.

 

Resistance is seen at ₹1,85,570. If silver sustains above this level, prices could recover towards ₹1,87,360. Further weakness could bring the next support level into focus.

Why are gold and silver under pressure?

Vikram Subburaj, chief executive officer of Giottus.com, said rising US bond yields and expectations of another interest-rate increase by the Federal Reserve were putting pressure on gold and silver.

 

In Asian trade, the yield on the 10-year US Treasury rose 2.1 basis points to 4.913 per cent. The dollar index also edged higher to 101.81. These developments were making it difficult for fresh buying momentum in gold and silver to sustain, he said.

 

A sharp decline in crude oil prices on Monday had eased inflation concerns and provided some relief to bullion. However, estimates on Tuesday morning indicated a 73 per cent probability of a Federal Reserve rate increase in December, suggesting that investors continued to expect monetary tightening.

 

Lower energy prices have helped gold and silver recover to some extent, but the prospect of higher returns on interest-bearing assets is limiting demand for precious metals.

 

With US manufacturing activity strengthening in October, upcoming employment data will now be important in determining whether expectations of further rate increases weaken, Subburaj said.

MCX, Comex prices

 

Note: MCX gold futures prices are in rupees per 10 gram, while MCX silver futures prices are in rupees per kg. Comex gold and silver futures prices are in dollars per ounce. Last traded prices are as of the time of writing.