Stocks markets under pressure. Why gold prices are also falling?

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Stocks markets under pressure. Why gold prices are also falling?

Gold prices were under pressure for the sixth straight day in Indian markets.

Global equity markets and commodities like oil were under pressure today as China’s worsening Covid outbreak fueled fears of a bigger slowdown in the world’s second-largest economy. The MSCI Asia-Pacific gauge fell for the sixth session in seven with sharp declines in Hong Kong and China. However, gold, which is considered a safe-haven asset, has been under pressure too in recent days. 

Gold prices were under pressure for the sixth straight day in Indian markets. In noon trades gold futures on MCX were today down 0.75% to ₹51,874 per 10 gram while silver futures slumped 1.3% to ₹65,745 per kg. In six days, gold has so far fallen about ₹1,800 per 10 gram.

In international markets, gold languished near two-week lows amid elevated US dollar and firm bond yields. Spot gold was down 0.1% at $1,928.08 per ounce, the lowest since April 7.

Analysts say that despite the safe-haven demand from inflation and Ukraine concerns, a strong US dollar and firm US bond yields is putting pressure on gold. The dollar index today edged higher to 101.265, making gold less attractive for buyers holding other currencies. 

Treasuries snapped the rout of the past week that roiled markets while the dollar extended an advance as investors opted for safe havens. 

“COMEX gold trades about 0.5% lower near $1925/oz weighed down by firmness in US dollar amid Fed’s hawkish stance and some profit taking by ETF investors,” says Ravindra Rao, Head Commodity Research at Kotak Securities.

However, losses in gold is being capped by concerns about health of Chinese economy, increasing Russia-Ukraine tensions and inflation concerns, say analysts. 

“Gold has corrected after failing to sustain near $2000/oz level and may remain pressurized unless we see some stability across commodities,” Ravindra Rao of Kotak said. 

Sensex jumps 600 pts, Nifty around 17,150; all sectors in green

Stock Market Today: Sensex, Nifty opened higher on Tuesday

Benchmark Indian equities opened higher on Tuesday. The indices rebounded strongly after making losses for the last two sessions. The 30-share BSE benchmark was trading 657.67 points higher at 57,237.56 in early trade, while the Nifty jumped 204.35 points to 17,158.30.

Indian indices witnessed a positive start on Tuesday amid mixed global trends. Global sentiments were uplifted after world’s richest person Elon Musk clinched a deal to buy social media platform Twitter. The deal provided a boost to Wall Street as the indices reversed losses to end a volatile session higher. However, caution still prevails around the globe as renewed concerns over interest rate hikes, China’s sputtering economy, and high commodity prices continue to spoil investors’ mood. Oil prices took a hit, along with stocks in Europe, over concerns of Covid-19 outbreak in China, while Asian equities were mixed in early trade on Tuesday. Shares rose in Japan, South Korea, Shanghai, and Hong Kong, while that in Australia retreated. 

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