Gold, silver prices sink today; Where is yellow metal headed?

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Gold prices sink on Tuesday on the back firm US dollar, soaring Treasury yields, and hopes for much-awaited peace talks between Russia-Ukraine leaders. The downward slope in gold prices comes amidst hawkish Fed views. After advancing to near-record highs earlier this month, gold prices have held a steady range since last week.

In Mumbai, 10 gram gold in 24 carat is priced at 52,100 today down by 210 from the previous day’s 52,310. 100 gram in the same carat is available at 5,21,000 lower by 2,100 from the previous day of 5,23,100.

In 22 carat, 10 gram gold is priced at 47,750 in Mumbai lower by 200 from the previous day, while 100 gram is sold at 4,77,500 down by 2,000 from Monday’s level.

As for silver, 1 kg of this metal was available at 68,000 in Mumbai down by 400 from the previous day.

At MCX, gold futures maturing June 03, stood at 51,552 lower by 444 or 0.85%, while April 05 futures slipped by 416 or 0.81% to 51,155. Meanwhile, silver futures for May 05 maturity data, is available at 67,240 down by 865 or 1.3%.

In the international market, spot gold was at $ 1,913.47 per ounce down 0.6%.

In its technical view, IIFL Securities said, “Based on the current technical development on weekly chart, near term bias is likely to remain sideways down as prices continued to trade below the nearest crucial horizontal resistance. Weekly RSI fell below the upper range value of rising channel and currently resides underneath overbought territory, which further strengthens the expectations of correctional decline on card. However, MACD index is in positive territory but a deceleration in MACD histogram depicts mitigation in bullish momentum. Metal prices are in correction mode since it has formed a sort of double top on the weekly chart.”

The IIFL Securities gives a “sideways down recommendation: Sell MCX Gold June at 53,000-53,200 with stop loss of 53,600 and target of 51,500.”

As per IIFL, the gold market advanced to near-record highs earlier this month but then saw a steady decline heading into a key U.S. central bank policy meeting last week. They have since moved into a more steady range.

Further, the broker pointed out that the economy grew 5.7% last year, growing at its fastest since 1984. But inflation, measured by the Consumer Price Index, grew at an even faster rate, expanding by 7% in 2021, its most since 1981. Since then, CPI, expanding 7.5% YoY in January and 7.9% YoY in February. Which ultimately making fed hawkish.”

On Monday, the US’ 5-year and 30-year treasury notes rose by 2.56% and 2.55% which is the first time the shorter-dated yield (5-year) has surpassed the longer-dated yield (30-year note) since 2006 – a couple of years before Global Recession. The rise spike in the yields has escalated fears of possible recession going forward.

However, the ten-year treasury yields have also sharply picked up this month and have also reached the highest level since 2019 this week.

Although, gold still can find comfort in the geopolitical tensions surrounding the Russia-Ukraine conflict unless peace talks are accomplished.

“The geopolitical tensions surrounding the Ukraine conflict continued to fuel the demand for safe-haven gold, amid speculation that the West plans to announce further sanctions against Russia for its invasion of Ukraine,” IIFL Securities in its commodity mantra report said today.

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