Gold Prices Slip: How BOJ Rate Hike and US Inflation Data Sparked a Sell-Off

Softer inflation data from the United States also weighed on prices, even though gold is usually seen as a hedge against rising inflation.

On the Multi Commodity Exchange (MCX), gold futures for February delivery were trading 0.56 per cent lower at Rs 1,33,772 per 10 grams during early trade.

“Gold has support at $4275-4245 while resistance is at $4355-4385. Silver has support at $64.40-63.75 while resistance is at $65.60-66.15,” experts said.

“In INR terms, gold has support at Rs1,33,850-1,33,110 while resistance is at Rs1,35,350-1,35,970,” they added.

Silver futures for March were also under pressure and were down 0.26 per cent at Rs 2,03,034 per kg at the same time.

“Silver has support at Rs2,02,450-2,00,280 and resistance at Rs2,05,810, 2,07,270,” analysts stated.

The decline came after the Bank of Japan raised its key policy rate to 0.75%, the highest level since September 1995.

While the rate hike was largely expected by the market, it triggered some profit booking and is likely to impact yen-carry trades, which in turn influenced global commodity prices.

International gold prices also moved lower after US inflation data came in below expectations.

Consumer prices in the US rose 2.7 per cent year-on-year in November, which was lower than the 3.1 per cent increase predicted by economists.

Lower inflation reduces the appeal of gold as a hedge, putting pressure on prices.

Adding to the weakness, the dollar index edged up by 0.10 per cent and hovered near one-week highs.

A stronger dollar usually makes gold more expensive for buyers using other currencies, which further dampens demand for the yellow metal.

Analysts said that the mix of global cues, including central bank actions, softer US inflation data and a stronger dollar, led to a fall in gold and silver prices in early trade on Friday.

- IANS