Gold and silver prices in India today struggled ahead of the US Fed decision. On MCX, gold futures rose 0.08% to ₹51,810 per 10 gram. On the other hand, silver futures slipped 0.07% to ₹68,921 per kg. In the previous session, gold had edged 0.16% higher at ₹51,770 per 10 gram while silver had slipped 0.20%. Gold has remained directionless over last three weeks since hitting record highs of ₹56,200 last month.
“Mixed gold ETF flows also shows lack of direction in the market. Gold may remain choppy amid lack of clear cues. However general bias may be on the upside owing to increasing challenges to global economy and hopes of dovish stance of major central banks,” Kotak Securities said in a note.
In global markets, gold prices moved lower after hitting a two-week high in the previous session. Investors turned cautious ahead of the US Fed policy decision due later today while the US dollar was flat against rivals.
“The US dollar index has turned choppy after hitting 4-week high last week. Market players are positioning for upcoming central bank meetings with the general expectations that central banks may maintain accommodative stance,” Kotak said.
Spot gold was down 0.2% to $1,952.15 per ounce, after rising to $1,971.71 in the previous session.
“Optimism of economic recovery continues to hit the safe haven demand and thus the price of gold. Meanwhile, hopes of fiscal stimulus measures and a weak dollar will continue to offer lower level support to the metal. However, investors may take cautious bets today ahead of the US Fed policy decision and the news conference from Chairman Jerome Powell later the day,” said Hareesh V, head of commodity research at Geojit Financial Services.
The dollar index was flat against its rivals. An stronger dollar makes gold more expensive for holders of other currencies.
Among other precious metals, silver dipped 0.3% to $27.09 per ounce while platinum dropped 1.5% to $963.38 and palladium slipped 0.9% to $2,388.29.
The US Fed will today announce its policy decision in its first meeting since adopting a more accommodative approach to inflation and pledging to keep interest rates low for longer.
Lower interest rates decrease the opportunity cost of holding non-yielding gold while at the same time the yellow metal is seen as a hedge against inflation.
US House of Representatives Speaker Nancy Pelosi said Democrats were open to delaying an October recess to get a deal with Republicans on a new coronavirus aid bill.
In India, gold prices are up about 30% so far this year, tracking a rally in global markets. Unprecedented stimulus and lower interest rates have made gold one of the best asset classes this year amid the coronavirus pandemic.
Gold imports into India jumped to $3.7 billion in August as against $1.36 billion in the same month last year as jewellers restocked ahead of the festive season. (With Agency Inputs)