Gold rate today: Yellow metal falls from record high as investors trim positions

Gold prices retreated after touching lifetime highs earlier in the week as investors trimmed their positions.

On Wednesday, gold futures were down 0.12% at Rs 56,285 on MCX in morning trade. Meanwhile, silver futures rose Rs 78 to trade at Rs 69,264.

The losses in the yellow metal were limited as traders still hoped that the US Federal Reserve would adopt a less aggressive approach to rate hikes going forward.

In the international markets, spot gold fell 0.7% to $1,904.87 per ounce, after hitting its highest since the end of April on Monday. Meanwhile, US gold futures settled down 0.6% at $1,909.9 and the dollar index rose 0.2%. A stronger dollar makes gold more expensive for other currency holders.

"Gold and silver prices fell on Tuesday as the dollar ticked up, while investors still sought direction from the US Federal Reserve's rate hike path. The dollar index gained 0.2%, making gold more expensive for overseas buyers, while benchmark 10-year yields also moved up," said Rahul Kalantri, VP-Commodities, Mehta Equities.

Analysts also attributed the fall in gold prices to the trimming of positions by participants and expect the volatility to continue throughout the session.

"Gold has support at Rs 56,110-55,780, while resistance is at Rs 56,580 to 56,710 levels," Kalantri said.

Investors are expecting over 90% odds of a 25 basis point rate hike from the Fed in February and see rates peaking at 4.94% in June, while most Fed officials see rates landing north of 5% into the next year.

Citigroup Inc Chief Executive Officer Jane Fraser said in an interview with CNBC that the US Federal Reserve could slow rate hikes in late spring or early summer. In a low-interest rate regime, lesser returns on interest-bearing assets such as bonds turn gold attractive.

"We're looking at this as more of a slight pullback within our sideways-to-higher trend. We believe the combination of the weaker dollar and sticky inflation concerns continues to support our underlying positive environment," said David Meger, director-metals trading, High Ridge Futures.

(With inputs from agencies)

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