Gold, Silver Futures Retreat from Record Highs on Profit Booking as Fed Rate Decision Looms

Gold and silver prices eased from their record highs in futures trade on Wednesday as traders booked profits at elevated levels, dragging both precious metals into negative territory ahead of the keenly awaited US Federal Reserve monetary policy outcome.

On the Multi Commodity Exchange (MCX), gold futures for October delivery fell Rs 259 or 0.24 per cent to Rs 1,09,897 per 10 grams, as investors trimmed their positions after the yellow metal touched a lifetime high of Rs 1,10,666 per 10 grams on Tuesday.

Similarly, the December contract for gold futures declined Rs 232 or 0.21 per cent to Rs 1,10,953 per 10 grams after scaling a record peak of Rs 1,11,703 per 10 grams in the previous session.

Silver too retreated from its peak, with profit-taking weighing on sentiment.

The white metal futures for December delivery dropped Rs 1,267 or nearly 1 per cent to Rs 1,27,553 per kilogram. The March next year contract for silver futures also declined Rs 1,169 or 0.9 per cent to Rs 1,29,160 per kg on the MCX.

"After hitting record highs in the domestic market, investors booked profit at higher levels, which weighed on sentiment, leading both metals to trade in the red as traders turned cautious ahead of the US Federal Reserve meeting," said Rahul Kalantri, Vice-President of Commodities at Mehta Equities Ltd.

He added that the dollar index and the US 10-year Treasury yields slipped amid strength in the Euro and expectations of multiple Fed rate cuts, supporting bullion prices. However, a firm rupee capped the upside in the domestic markets.

In the international markets, gold and silver futures witnessed a pullback after hitting lifetime highs, with traders staying cautious ahead of the Fed’s policy decision.

Gold futures for December delivery were quoted 0.19 per cent lower at USD 3,718.10 per ounce after scaling a fresh peak of USD 3,739.90 per ounce on Tuesday.

Silver futures fell 1.20 per cent to USD 42.40 per ounce. In the previous session, it had hit a 14-year high of USD 43.43 per ounce.

Manav Modi, Research Analyst -Precious Metal, Motilal Oswal Financial Services, said, "Investors will closely monitor the Federal Reserve's policy meeting scheduled later tonight, where a much-awaited rate cut of 25 basis points could be announced. Along with that, comments from Fed Chair Jerome Powell, dot plot and economic forecasts will also be under the radar, possibly triggering volatility in the market." Meanwhile, the US and China meet are showing some optimism regarding possible first steps taken towards the trade deal between the two major economies. Along with the Fed meeting, the Bank of England and the Bank of Japan's policy meeting this week will also be under the radar for the investors, Modi added.