Gold prices fell sharply in India today amid tumble in global commodity prices. On MCX, gold futures fell 1.6% or ₹830 per 10 gram to ₹51,292 per 10 gram while silver slumped 2.7% to 56916 per kg. In global markets, gold today lost more than 2% to sink further below the important support level of $1,800 per ounce.
The dollar hit its highest in about two decades against a basket of other major currencies, making the safe-haven metal less appealing for overseas buyers, as investors worried about a potential recession. The US dollar index traded sharply higher near 106 levels buoyed sharply by safe haven buying and weakness in the Euro as soaring energy prices in Europe raised serious concerns regarding the health of the economy, say analysts.
However, weighing on price is monetary tightening stance of Fed and other central bank and continuing ETF outflows and possible slowdown in Indian demand due to import duty hike, they add. The Indian government sharply hiked import duty on gold to check the depreciation in rupee which hit record low level of 79.37 against the US dollar.
Gold traders now await minutes from the Federal Reserve’s June meeting on Wednesday for new clues on the likely magnitude of rate hikes in the coming months. Among other precious metals, spot silver fell 3.4% to $19.27 per ounce and platinum declined 2.3% to $865.48.
The dollar rose to its strongest level in more than two years, making commodities priced in the currency less attractive. The prices of other commodities fell as recession fears continue to grip markets.
Equities and oil plummeted today on concerns of a looming global recession. Global benchmark Brent crude was down $10.77, or 9.5%, at $102.73 a barrel.
“Commodities may remain volatile amid increasing nervousness about global economic growth as well as renewed concerns about health of Chinese economy. Also, caution ahead of release of FOMC Meeting minutes and US labor report due later this week will weigh on global market sentiments,” Kotak Securities said in a note.
On Wall Street, the S&P 500 and the Dow fell on Tuesday, with investors fretting about the possibility of a recession as central banks across the world take aggressive actions to stem a surge in inflation.