Speculations about US Fed rates and coronavirus risks keep gold prices subdued

Gold prices traded lower with spot gold prices at COMEX fell by more than 1% to $1783 per ounce for the week. Gold February futures at MCX ended 0.07% lower at Rs. 47925 per 10-gram capping downside on rupee depreciation. The spot rupee ended 0.40% lower at 75.17 against the dollar for the week. Gold ETF holdings witnessed outflows as holdings at SPDR Gold Shares fell to 984 tonnes from the previous week’s 993 tonnes.

Silver prices extended fall with spot silver prices at COMEX fell by 2.73% at $22.52 per ounce for the week. MCX Silver March futures declined by 2.22% to Rs. 61567 per KG for the week. Silver prices underperformed gold with selling in industrial metals on demand worries on virus threat.

Bullion prices traded lower for the third consecutive week as stronger dollar and speculation about US Federal Reserve rates kept precious metals under pressure during the week. Data showed U.S. job growth registered its smallest increase this year while the unemployment rate fell by more than forecast to 4.2%, offering a mixed picture that may nevertheless push the Fed to quicken the wind-down of pandemic stimulus.

Meanwhile, Goldman Sachs Group Inc. economists cut their forecasts for the U.S. economy this year and next after deciding that the spread of the omicron strain of the coronavirus would exert a “modest downside” drag on growth.

Bullion prices capped downside witnessing recovery on Friday with fall in US bond yields and growing omicron virus worries across globe. The International Monetary Fund even said the Omicron variant was likely to reinforce the IMF’s decision to downgrade global growth forecasts it made in October. The 10-year bond yields fell to 1.356%, which also keeps inflation-adjusted yields in negative territory boosting buying in precious metals.

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