Inflation, Omicron worries arrest price erosion as stronger dollar, fears of faster tapering makes gold jittery; buying opportunity beckons, says analyst

Gold prices were moving steadily on Tuesday during the first half of the trading session. The MCX Gold and Silver futures were trading positively in the evening session too. Around 7 pm, the February Gold Futures were trading at Rs 47,976 per 10 gram on the MCX while the MCX March Silver futures were trading at Rs 61,577 per kg.

While the yellow metal futures were higher by Rs 62 or 0.13 per cent from the Monday closing price, the Silver futures were up over Rs 300 or 0.50 around this time.

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Brokerage firm Motilal Oswal said that Gold traded steady amid a stronger US Dollar and fears looming over the pace of tapering exercise by the US Federal Reserve. The uncertainty over coronavirus Omicron variant and inflationary pressures acted as a countervailing force, aiding the bullion price movement, it further said.

The brokerage firm expects Gold and Silver to trade in a range over the remaining part of the evening trading session. It sees support at Rs 47,750 and Rs 47,450 for February Gold futures. As for MCX March Silver futures, a rangebound trading is expected here too. Support is seem between Rs 61,000 and Rs 60,600 while the resistance is seen between Rs 62,200 and Rs 62,600.

Meanwhile, analyst Anuj Gupta said that hedge funds and money managers continued to liquidate their bullish gold bets as the Federal Reserve looks to fight the growing inflation threat by tightening monetary policy faster than expected.

He retains a BUY stance on February Gold Futures at Rs 47,800 with a stop loss at Rs 47,600 and the target price at Rs 48,300. He also reiterated a buy call on March Silver futures at Rs 61,200 with a stop loss at Rs 60,700 and price target at Rs 62,200.

On CME, the February Gold futures were trading at USD 1776, down by USD 3.4 or 0.19 per cent. March Silver Futures were trading at US 22.29, up 0.14 per cent on the CME.

Motilal Oswal sees support at USD 1770-1755 whereas resistance at USD 1790-1805. As for Silver, support is seen at USD 22.20-22 and resistance at USD 22.55-22.75.

According to Commodity Futures Trading Commission (CFTC), bullish speculative interest in gold has fallen to a one-month low as prices are unable to hold gains above USD 1,800 an ounce, Gupta said.

The CFTC disaggregated CoT report for the week ending November 30 which showed that money managers reduced their speculative gross long positions in Comex gold futures by 14,804 contracts to137,469.

At the same time, short positions dropped by 1,550 contracts to 45,384. Gold's net length positioning is now at 92,085 contracts, down 12.5 per cent from the previous week, Gupta informed.

The gold market was relatively volatile during the survey period as prices briefly pushed above USD 1,800 an ounce but could not withstand new selling pressure.