- Gold and silver prices rose after a two-day decline amid a retreat in oil prices
- Spot gold increased 1.38% to $4,353.34 per ounce, and silver rose 1.48% to $64.6
- MCX futures for gold and silver climbed over 1%, reflecting the global price trend
Gold and silver prices surged follwoing a two-day dip as traders focused on a modest retreat in oil prices amid bets on the strong possibility of an interest-rate hike by the Federal Reserve on Wednesday.
Spot gold rose 1.38% to $4,353.34 an ounce at 9:22 pm IST, while silver advanced 1.48% to $64.6. Bullion prices jumped in India too as MCX October futures contract climbed 1.05% or Rs 1,589 to Rs 1,52,545 per 10 grams, while the MCX silver December futures advanced 1.45% or Rs 3,371 to Rs 2,35,489 per kg.
The rally in rpecious metals come as oil prices fell, easing supply disruptions fears and inflationary concerns. Traders are still pricing in a 92% chance of a Fed rate hike, according CME Fed Watch data follwoing higher than expected inflation figures last week. Higher borrowing costs are typically negative for gold, which doesn't pay interest.
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Even as the possibility of a Fed rate hike typically weighs on bullion, markets have already priced in the move, possibly limiting its impact on gold and silver prices.
“With markets already pricing a high chance of a Fed hike this week, the main uncertainty is less about the hike itself, and more about what comes after,” Christopher Wong, a strategist at Oversea-Chinese Banking Corp told Bloomberg News. “If the Fed keeps the door open to further tightening, gold may be more vulnerable,” and move lower toward $4,000 an ounce if key support at $4,250 is broken, he added.
Additionally, the 10-year US Treasury yield dipped after surging to the highest level in nearly two decades, following a global bond selloff led by booming capital investment and higher energy prices that raised inflation risks. The two-year yield, usually sensitive to near-term policy decisions, edged lower, easing some pressure on the precious metal.
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