Informist, Monday, May 2, 2022

By Chinmay Mungse

MUMBAI – GOLD and SILVER contracts on the Multi Commodity Exchange and COMEX were trading significantly lower today, weighed down by a stronger US dollar against a basket of major currencies ahead of the US Federal Reserve's policy meeting this week.

* Gold contracts on the MCX and COMEX fell more than 1% as increased optimism about US Fed officials adopting an aggressive stance at its meeting kept the dollar index elevated, thus pressuring gold prices.

* Analysts believe that the US Fed will be taking a hawkish stance to cool down the soaring inflation in the US. In March, inflation in the country had risen 5.2% year-on-year.

* "The US Fed has to act fast to control the rising rates in the country, and is expected to be hawkish in the upcoming meeting," said Sriram Iyer, senior analyst at Reliance Securities.

* According to reports, the market believes there is an almost 99% probability of the Fed hiking rates by 75-100 basis points at the meeting. Earlier, it was expecting a 50-bps hike.

* Analysts are also expecting the US Fed Chair Jerome Powell to comment on the balance sheet trimming during the upcoming policy meeting. US Fed officials were reportedly in favour of trimming the balance sheet by $95 bln per month.

* At 1630 IST, the most-active contracts of bullion were:
   --June gold was down 1.4% at 51,051 rupees per 10 gm on MCX
   --June gold was down 1.6% at $1,881.3 an ounce on COMEX
   --May silver was down 1.2% at 62,779 rupees per kg on MCX
   –-May silver was down 1.6% at $22.67 an ounce on COMEX

* Outlook for the evening session:
   --MCX gold seen at 50,700-51,700 rupees
   --COMEX gold seen at $1,854-$1,908
   --MCX silver seen at 62,500-63,500 rupees
   --COMEX silver seen at $22.41-$23.31.

End

US$1 = 76.51 rupees

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Tanima Banerjee

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