Gold price surges to Rs 44,828 per 10 gram on safe-haven demand; silver up by Rs 1,124 a kg

Source: Reuters

Source: Reuters

Gold prices climbed by Rs 496 to Rs 44,828 per 10 gram in the Mumbai retail market on safe-haven buying and weakness in the equity market but stronger rupee capped upside. The yellow metal had declined Rs 184, or 0.41 percent in the domestic market last week.

The rate of 10 gram 22-carat gold in Mumbai was Rs 41,062 plus 3 percent GST, while 24-carat 10 gram was Rs 44,828 plus GST. The 18-carat gold quoted at Rs 33,621 plus GST in the retail market.

“The traders and investors rush to safe-haven buying after US President Joe Biden’s $ 1.9 trillion stimulus plan got final approval. The Biden administration aims to vaccinate the country’s entire adult population before Independence Day on July 4. The higher inflation concerns pressured dollar index to pare weekly gains. The dollar index ended down by 0.32 percent at 91.68 mark for the week. The US 10 year treasury yields rose 1.64 percent during the week limiting upside in the yellow metal,” said Tapan Patel- Senior Analyst (Commodities), HDFC Securities.

The CFTC data showed that money managers decreased net long positions by 15960 lots in the last week.

The US dollar trades higher at 91.81, or up 0.15 percent against a basket of six rival currencies. 

The US 10-year treasury yields continued to hover near 13-month highs at 1.63 percent limiting upside in the yellow metal.

Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell by 3.2 tonnes to 1,052.07 tonnes.

Spot gold rose $ 1.96 to $ 1,729.51 an ounce at 1214 GMT in London trading.

MCX Bulldesk jumped 70 points or 0.49 percent, at 14,298 at 18:02. The index tracks the real-time performance of MCX Gold and MCX Silver futures.

Navneet Damani, Vice President, Motilal Oswal said, “Gold prices gained as the passage of a US stimulus bill stoked inflation risks. This week will be very important as firstly, Fed policy is scheduled later this week, where the expectation is that the central bank could maintain a dovish stance, hence supporting the metal. Also, US and Chinese officials will be meeting for the first time under the Biden presidency to talk about a range of issues by end of this week.” 

The broader range on COMEX could be between $ 1,710 and $ 1,758, and on the domestic front, prices could hover in the range of Rs 44,700- 45,370.

Sunand Subramaniam, Senior Research Associate, Choice Broking said, “Fundamentally for the month, we expect international gold futures to continue to trade bearish. In the longer duration, gold could remain in the weaker zone as there is good recovery in the global economy.”

“The marriage season demand is likely to pick in the later months (June-August) and we could see further lower demand for gold as spot traders look for additional discounting in prices before they stock in gold biscuits. Overall, we expect a bearish trend in MCX gold futures for the month ahead,” Subramaniam added.

The gold/silver ratio currently stands at 66.94 to 1, which means the number of silver ounces required to buy one ounce of gold.

Silver prices advanced by Rs 1,124 to Rs 66,965 per kg from its closing on March 12. 

In the futures market, the gold rate touched an intraday high of Rs 44,964 and an intraday low of Rs 44,730 on the Multi-Commodity Exchange (MCX). For the April series, the yellow metal touched a low of Rs 44,150 and a high of Rs 51,931.

Gold futures for April delivery gained by Rs 135, or 0.30 percent, at Rs 44,883 per 10 gram in evening trade on a business turnover of 9,913 lots. The same for June rose Rs 183, or 0.41 percent, at Rs 45,290 on a business turnover of 7,143 lots.

The value of the April and June’s contracts traded so far is Rs 2,252.60 crore and Rs 381.22 crore, respectively.

Similarly, Gold Mini contract for April soared Rs 143, or 0.32 percent at Rs 44,880 on a business turnover of 24,368 lots.

Trading Strategy

Ravindra Rao, VP- Head Commodity Research at Kotak Securities

“COMEX gold trades higher near $ 1727/oz as the US dollar index and US 10-year bond yield eased marginally after US Treasury Secretary Janet Yellen stated that US inflation risks remain subdued despite the Biden administration stimulus. However, weaker investor interest and general strength in equity markets are weighing on gold. Gold may continue to sway along with US dollar; however, a sharp rise is unlikely until yields correct sharply.”

Tapan Patel, Senior Analyst (Commodities), HDFC Securities

We expect gold prices to trade sideways to up for the day with COMEX spot gold support lies at $ 1,710 and resistance at $ 1,740. MCX Gold April support lies at Rs 44,500 and resistance lies at Rs 45,100.

Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited

International gold is trading with marginal bullish momentum. Prices are rising since morning and are sustaining above $ 1,700 levels with resistance at $ 1,740-1,750 levels and we could expect the market to resist below them. On MCX, gold is trading below the resistance of Rs 44,950-45,150 levels. If prices breach the resistance levels, then Rs 44,500 levels could be tested on the upside whereas support is at Rs 44,300-44,150 levels.

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