Gold prices today fall after biggest one-day gain in 3 months

Commodities attempted a recovery but global risk appetite is limited as prospects of tighter monetary policy across the globe coupled with lingering energy crisis kept investors nervous, Kotak Securities said in a note. 

Gold has come under pressure in the past two weeks as the greenback strengthened to record levels. 

In global markets, gold rates are down 20% since scaling above the $2,000 level in March, as rapid US monetary tightening by US Fed made non-yielding gold less attractive. Spot silver today fell 0.4% to $18.82 per ounce.

Bank of England’s decision to unveil a bond-buying program to boost UK bonds and boosted pound, leading to a slight pullback in US dollar. 

“The Bank of England stepped in to rescue the pension funds that were facing margin calls and a risk of default due to a falling pound and soaring UK yields (pension funds were suffering huge MTM or mark to market losses on FX and interest rate derivatives due to the 8% drop in GBP and 100bps rise in yields over the last couple of sessions). The BOE said it would buy unlimited amounts of longer-dated UK Gilts to prevent a systemic crisis. The bond-buying operations will be conducted every weekday until October 14th. The BOE would buy GBP 5 billion of gilts at every auction,” said IFA Global in a note. 

Gold is expected to see choppy trade today while silver likely to trade with mild negative bias, domestic brokerage Geojit said in a note. 

In equities markets, sentiment improved with Wall Street’s benchmark S&P 500 index surging 2% overnight  after the Bank of England announced it would buy as many government bonds as needed to restore order to financial markets. That helped to calm investor fears that planned British tax cuts would push up already high inflation. (With Agency Inputs)