Gold prices edged lower in early trade on Friday, December 19, as investors booked profits following recent gains, while global developments added pressure to bullion prices. The decline came after the Bank of Japan (BoJ) raised its key policy rate by 25 basis points, alongside softer US inflation data and a slightly stronger US dollar.
On MCX, gold February futures fell 0.56% to Rs. 1,33,772 per 10 grams. MCX silver March futures also fell 0.26% at Rs. 2,03,034 per kg.
Gold prices decreased in Mumbai. 24K gold fell to Rs. 13,418 from yesterday’s Rs. 13,484per gram. The price for 10 grams of 24K gold has also declined to Rs. 1,34,180.00 from Rs. 1,34,840.00.
Similarly, 22K gold prices have also fallen to Rs. 12,300.00 per gram from Rs. 12,360.00; the cost for 10 grams of 22K gold has dipped to Rs. 1,23,000.00 from Rs. 1,23,600.00.
As in Mumbai, gold prices in Delhi also decreased. 24K gold price per gram trades at Rs. 13,433.00 from the previous price of Rs. 13,499.00.
The price of 10 grams of 24K gold has also declined from Rs. 1,34,990.00 to Rs. 1,34,330.00.
The Bank of Japan increased its benchmark interest rate to 0.75%. This is the highest rate since September 1995. At the same time, many market experts were anticipating this decision.
It has caused a ripple effect across various yen-carry trade positions, affecting global commodities as higher Japanese interest rates support the Japanese Yen and make gold and other non-yielding investments less attractive than Japanese Yen-denominated investments.
The result is a lower demand for non-yielding investments by investors when they are drawn to Japanese Yen-denominated investments.
Last month, US Consumer Price Index (CPI) increased 2.7% year over year, slightly below the expected increase of 3.1%. This continues to support the view that the Federal Reserve may lower interest rates in the near term.
At the same time, there was also a small increase in the US dollar Index (USD), which increased by approximately 0.10% to nearly 1.00% over the past week.
Both of these factors combined created a decrease in demand for gold bullion. Gold was down 0.3% at $4,319.09 per ounce and gold futures in the US were down 0.4% to $4,346.70.
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Analysts expect MCX gold February futures to trade in a broad range of Rs. 1,34,000-Rs. 1,35,000 per 10 grams in the near term.
Key support levels for gold are seen near Rs. 1,33,850 and Rs. 1,33,110, while resistance is placed around Rs. 1,35,350 and Rs. 1,35,970.
Silver has support at Rs. 2,02,450 and Rs. 2,00,28,0, and resistance is at Rs. 2,05,810 and Rs. 2,07,270.