Gold slips below $4,000 on Fed-hike bets; Indian 24-carat falls Rs 1,690 to Rs 1.43 lakh, Kerala down 1.17%

Silver was quoted at Rs 2,10,000 a kilogram in retail rates, down Rs 5,000. On the Multi Commodity Exchange, gold for December delivery was at Rs 1,41,927, down 0.47 per cent, and silver for December delivery was at Rs 1,86,697, down 1.45 per cent. Retail rates include taxes and charges and differ from exchange prices.

Rates in Kerala

In Kerala, 24-carat gold was Rs 14,226 a gram, 22-carat Rs 13,041 and 18-carat Rs 10,670, a fall of 1.17 per cent from Thursday. For the unit that jewellers in the state call a sovereign, or eight grams, 24-carat gold was Rs 1,13,808 and 22-carat Rs 1,04,328. Calculated from the day's fall, a sovereign of 22-carat gold is about Rs 1,232 cheaper than on Thursday, which matches a Malayalam report of a drop of more than Rs 1,200. The same report says that global gold is below 4,000 dollars and that some traders fear a repeat of 2013, when gold fell sharply.

Strong American data on Thursday firmed up bets on a Fed hike in December. Preliminary third-quarter GDP grew at an annualised rate of 3.4 per cent, up from 2.2 per cent in the second quarter and above the forecast of 3.2 per cent. The price index for personal consumption expenditure rose 0.5 per cent in September and 3.6 per cent from a year earlier, and the core measure rose 0.3 per cent on the month and 3.1 per cent on the year. The CME FedWatch tool showed about a 75 per cent chance of a hike in December, and one analysis said that about three more hikes are already priced in. The Fed kept rates unchanged on Wednesday, with two members voting for an increase.

Higher interest rates reduce the appeal of gold, which pays no interest. High oil prices keep inflation fears alive, and the geopolitical news has been mixed: a US letter to Iran aimed at restarting peace talks, a Qatari draft deal, hostilities between the Houthis and Saudi Arabia, and a claim by the Iranian navy that four oil tankers hit sea mines in the Strait of Hormuz, which supported oil.

Bond yields fell as investors bought safe-haven bonds after weak earnings from big technology companies, and the dollar fell for a third day on hopes of diplomacy in West Asia, but neither stopped gold from sliding. Analyst Haresh Menghani said that gold's path of least resistance is down and that rebounds are likely to be sold. Technical analysts see support at about 3,975 dollars and then 3,946 dollars, with resistance near 4,025 to 4,030 dollars. Strong inflows into exchange-traded funds and buying by central banks may give some support.

Gold is still far above its level a year ago, but it is well below its high this year, when futures touched Rs 1,80,779 per 10 grams. A fall of this kind can bring buyers back, but retail prices include making charges and GST and differ from city to city, so the final bill matters more than the headline rate. The next major event is the Fed's meeting on 9 December. This article is for information and is not investment advice.