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India Bullion: Down as dollar, US bond yields rise post Fed meet

Informist, Thursday, Jan 27, 2022

 

By Chinmay Mungse

 

MUMBAI – Gold and silver contracts fell today on the Multi Commodity Exchange of India and COMEX after the US Federal Reserve announced an interest rate hike and significant reduction in its asset holdings in March.

 

* The US Fed on Wednesday decided to raise interest rates in March to cool rising inflation in the country. The central bank’s decision boosted the dollar index to a five-week high while short-term US bond yields rose to a 23-month-high.

 

* “Fed’s confirmation of hiking interest rates in March has boosted the dollar index and the US treasury bond yields, which put pressure on bullion prices in the international market,” said Ajay Kedia, research head at Kedia Comtrade.

 

* In his address to the press, Fed Chairman Jerome Powell said, “There’s not much sense in trying to guess when exactly these rate hikes will happen in 2022, nor how big they will be.”

 

* Analysts now expect the Fed to hike interest rates four times this year, as opposed to the earlier market guess of a three-time rate hike.

 

* “There is now a greater risk that the Fed will implement rate hikes more quickly than previously anticipated or will see itself forced to raise interest rates by more each time if the situation demands it,” said Commerzbank AG.

 

* However, the downside to bullion prices was capped by escalating tensions between Ukraine and Russia.

 

* Investors are now waiting for the US fourth-quarter GDP data, due later today, as well as the US personal consumption expenditure price index data on Friday. Analysts expect the GDP to expand at around 5.5% while the PCE is seen rising by 5%, indicating a rise in inflation.

 

* “If the PCE data is on the higher side, GOLD prices will see some respite,” said Sriram Iyer, senior analyst at Reliance Securities.

 

* At 1727 IST, the most-active contracts of bullion were:
   –February gold was down 1.3% at 48,219 rupees per 10 gm on MCX
   –February gold was down 1.2% at $1,808.3 an ounce on COMEX
   –March SILVER was down 1.9% at 63,884 rupees per kg on MCX
   –-March silver was down 2.8% at $23.13 an ounce on COMEX

 

* Outlook for the evening session:
   –MCX gold seen at 48,000-48,600 rupees
   –COMEX gold seen at $1,800-$1,830
   –MCX silver seen at 62,600-63,600 rupees
   –COMEX silver seen at $23.00-$23.80

End

 

US$1 = 75.07 rupees

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Ashish Shirke

 

Cogencis news is now Informist. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

 

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© Informist Media Pvt. Ltd. 2022. All rights reserved.

Source: Cogencis

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