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Gold prices today in India see big fall. Check latest rates

In India gold futures fell 1.2% to six-month low 49,390 per 10 grams while silver contracts fell 2.6% to 56,525 per kg, following a weak global trend. In global markets, gold fell more than 1% to its two-year low, as a combination of a robust dollar and high yields on US bonds reduced the precious metal’s attractiveness. Spot gold fell 1.3% to $1,648.59 an ounce. Spot silver fell 2.9% to $19.09 an ounce.

The dollar index jumped to a new high in two decades against its rivals, making gold less attractive to other currency holders. Benchmark 10-year US Treasury yields peaked at 11 years, raising the opportunity cost of holding gold uninteresting paying assets. This week, a number of central banks, including the US Federal Reserve and the Bank of England, hiked interest rates this week to contain inflation, fueling concerns about a global recession.

While gold is considered a safe investment in times of financial uncertainty, rising interest rates extinguish its appeal because it yields no interest. Analysts say the basic trend for gold remains negative on the outlook for monetary tightening, but signs of a correction in the US dollar could offer some support. New shorts should be avoided at current levels, they suggest.

“COMEX gold is trading lower, weighed down by the strength of the US dollar and bond yields. The US 10-year yield jumped to its 2011 high in response to the Fed’s aggressive monetary tightening, but the spread between 2-year and 10-year yields has narrowed. The US dollar is still close to its 2002 high. Gold has weathered the decisions of the central bank and has managed to stay above recent lows, indicating dip buyers have emerged. However, continued gains are unlikely until the US dollar corrects significantly,” said Ravindra Rao, VP Head of Commodity Research at Kotak Securities.

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Analysts also say China’s struggle with the spread of the virus has tarnished growth prospects, as forecasts show. And in India, a weaker rupee, which has fallen above 81 per US dollar, has helped provide some support for domestic prices. Domestic gold rates are determined by the rupee-dollar rate and import duties. (with desk entrances)

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