Gold on MCX settled up 0.34% at 28509 as the U.S. Federal Reserve's cautious message on interest rates left the dollar around five-week lows, making bullion cheaper those holding other currencies. The Fed raised U.S. rates, as expected, but its earlier forecast of three rate increases this year remained unchanged, disappointing some investors who had hoped for hints of a possible fourth hike in 2017.
Rate rises lead to higher bond yields, which increase the opportunity cost of holding non-yielding bullion and tend to boost the dollar, in which gold is priced. Investors were also looking ahead to the Group of 20 (G20) finance leaders' meeting in Germany this weekend, where any attempt by the Trump administration to pursue protectionist policies could fuel demand for gold as a safe-haven. Gold premiums rose in China this week as traders said supply of the precious metal was limited due to tightening import restrictions to stem currency outflows.
Premiums climbed to over $20 an ounce against the international benchmark from $15-$17 last week. China gold premiums surged to their highest in nearly three years late last year as traders saw Beijing's efforts to restrict import licences impacting supply. China permits only 13 banks, including three foreign lenders, to import gold, Shanghai Gold Exchange said. China's monthly net gold imports via main conduit Hong Kong plunged 38.3 percent in January. Dealers in India were charging a premium of up to $1.50 an ounce this week over official domestic prices.
Technically market is under short covering as market has witnessed drop in open interest by -6.03% to settled at 4694, now Gold is getting support at 28422 and below same could see a test of 28336 level, And resistance is now likely to be seen at 28562, a move above could see prices testing 28616.