The Federal Reserve’s aggressive stance aims to keep the yellow metal under pressure

The Federal Reserve's aggressive stance aims to keep the yellow metal under pressure

Comex gold was trading 0.8 percent lower near $1,814 a troy ounce after a 1.2 percent decline the previous day. Gold has weakened as US dollar and bond yields edged up post the Fed decision to keeping monetary policy unchanged as expected but Powell indicated possibility of a rate hike at March meeting. Gold may remain under pressure on the Fed’s hawkish stance but may not see a break below $1,800 as safe- haven buying may lend some support, said Ravindra Rao, CMT, EPAT, VP- Head Commodity Research, Kotak Securities.

The dollar and treasury yields rebounded after US Federal Reserve Chairman Jerome Powell signalled a shift away from pandemic-era economic support measures, with an interest rate hike likely in March. Gold was trading lower in India on January 27 following a decline in international markets as the dollar and treasury yields bounced after US Federal Reserve Chairman Jerome Powell signalled a shift away from pandemic-era economic support measures, with an interest rate hike likely in March. At 9.41 a.m. on the Multi-Commodity Exchange (MCX), gold contracts were trading 1.25 percent lower at Rs 48,240 for 10 grammes, and silver contracts were trading 1.38 percent lower.

Gold and silver plunged on January 26 after the Federal Reserve gave signalled interest rate hikes from March. Both precious metals settled on a weaker note in the international market. Strength in the dollar and bond yields pushed the metals lower. However, higher global inflation concerns, lower economic growth prospects and tensions between Ukraine and Russia could support precious metals at lower levels. Weakness in the rupee could also support prices in the domestic markets.

We expect gold to hold $1,800 and silver $23 on a closing basis. Gold has support at $1,814-18,00 and resistance at $1,842-1,855, while silver has support at $23.55-23.20 and resistance at $24.10-24.40. On MCX, gold has support at Rs 48,600-48,330 and resistance at Rs 49,000-49,200, while silver has support at Rs 63,600-63,220 and resistance at Rs 64,450-64,800. We suggest selling silver below Rs 63800 with a stop loss of Rs 64,300 for target of Rs 63m000.

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