Gold snaps 2-day losing streak; US Fed policy in focus

New Delhi, Dec 17: Gold prices bounced back on Tuesday, rising Rs 950 to Rs 79,300 per 10 grams in the national capital, as jewellers made fresh buying at prevailing levels to meet the wedding season demand, according to the All India Sarafa Association.

Besides, the US Federal Reserve, which starts its two-day monetary policy meeting on Tuesday, is expected to announce its interest rate decision, which could have an impact on the overall gold performance next year.

The precious metal of 99.9 per cent purity ended at Rs 78,350 per 10 grams on Monday.

However, silver extended its losses for the third straight day, declining Rs 1,000 to Rs 91,500 per kg against the previous close of Rs 92,500 per kg.

Meanwhile, the price of gold of 99.5 per cent purity jumped Rs 950 to Rs 78,900 per 10 grams on Tuesday. The yellow metal closed at Rs 77,950 per 10 grams in the previous trading session.

Traders said wedding season buying by jewellers reignited demand for the precious metal as a safe haven.

In futures trade on the Multi Commodity Exchange (MCX), gold contracts for February delivery plunged Rs 410, or 0.53 per cent, to Rs 76,651 per 10 grams.

"Gold prices weakened on Comex and dropped on MCX as the outcome of the Fed's policy meeting prompted caution among market participants," Jateen Trivedi, VP Research Analyst of Commodity and Currency at LKP Securities, said.

Long positions were trimmed ahead of the year's final policy announcement, with expectations that forward guidance on rate cuts may remain unclear. This lack of clarity weighed on sentiment, especially as the dollar index continued its upward momentum, Trivedi added.

Silver contracts for March delivery slumped Rs 851, or 0.93 per cent, to Rs 90,332 per kg on the bourse.

Comex gold futures fell USD 15.50 per ounce, or 0.58 per cent, to USD 2,654.50 per ounce in the international markets.

"Gold prices remain steady as mixed US data raises uncertainty about future interest rate cuts. While manufacturing PMI came in weaker than expected, Services PMI exceeded forecasts," Abans Holdings' Chief Executive Officer Chintan Mehta, said.