Gold prices steady at Rs 44,861/10 gm as US bond yields, dollar spike; silver gains Rs 395

Image: PTI

Image: PTI

Gold prices were steady at Rs 44,861 per 10 gram in the Mumbai retail market tracking a sharp jump in the global market yesterday after the US Federal Reserve kept interest rate and bond purchases unchanged. However, the elevated bond yields and the stronger dollar has taken the sheen off from the precious metal.

The rate of 10 gram 22-carat gold in Mumbai was Rs 41,093 plus 3 percent GST, while 24-carat 10 gram was Rs 44,861 plus GST. The 18-carat gold quoted at Rs 33,646 plus GST in the retail market.

The yellow metal rallied sharply after the US Fed decision and touched a high of $ 1,755.53 during intraday ounce but turned negative as treasury yields and the dollar gained momentum despite the central bank promised to hold interest rates near zero till 2023.

Market participants now will keep an eye on the meeting between the US and Chinese officials scheduled today and tomorrow, the updates might trigger further volatility in the market. On the data front, market participants will keep an eye on the weekly jobless claims data scheduled later today; which if reported better than expected could further support the metal prices.

The US dollar trades higher at 91.62, or up 0.21 percent against a basket of six rival currencies. 

The US 10 year treasury yields rose to 1.73 percent, up 9 basis point diminishing the non-yielding bullion’s appeal.

Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund decreased 2 tonnes at 1,048.32 tonnes, the lowest since April 2020.

Spot gold dropped $ 13.41 to $ 1,731.89 an ounce at 1209 GMT in London trading.

MCX Bulldesk jumped 37 points or 0.26 percent, at 14,316 at 17:42. The index tracks the real-time performance of MCX Gold and MCX Silver futures.

Navneet Damani, Vice President, Motilal Oswal said, “Gold prices rose over 1% after the U.S. Fed in the policy statement yesterday maintained their accommodative stance, hence weighing on the dollar. Fed has a positive outlook for the US economy although, they said that they will keep the benchmark overnight interest rate near zero for years to come. They kept their ongoing liquidity measures in place and showed no concern regarding the rising inflation expectations.” 

The broader range on COMEX could be between $ 1,720- 1,763 and on the domestic front, prices could hover in the range of Rs 45,000- 45,570. 

“COMEX gold has erased some of the early gains to trade near $ 1,736/oz. Earlier Gold traded close to $ 1,750 amid correction in the US dollar index and bond yields on the back of Fed decision. Fed kept monetary policy unchanged as expected but played down risks from rising yields and indicated that interest may remain low until 2023. However, weighing on price is Fed’s upbeat growth projection and continuing ETF outflows. Although Gold has rescaled $ 1,750/oz a sustained move above $ 1,760 would further intensify the momentum. Till then one has to be cautious as US bond yields remain at elevated levels while ETF outflows continue”, said Ravindra Rao, VP- Head Commodity Research at Kotak Securities.

The gold/silver ratio currently stands at 66.90 to 1, which means the number of silver ounces required to buy one ounce of gold.

Silver prices increased by Rs 395 to Rs 67,049 per kg from its closing on March 17. 

In the futures market, the gold rate touched an intraday high of Rs 45,299 and an intraday low of Rs 44,765 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 64, or 0.14 percent, at Rs 44,904 per 10 gram in evening trade on a business turnover of 8,511 lots. The same for June soared Rs 49, or 0.11 percent, at Rs 45,255 on a business turnover of 7,889 lots.

The value of the April and June’s contracts traded so far is Rs 2,631.95 crore and Rs 383.43 crore, respectively.

Similarly, Gold Mini contract for April edged higher Rs 37, or 0.08 percent at Rs 44,885 on a business turnover of 22,301 lots.

Trading Strategy

Tapan Patel, Senior Analyst (Commodities), HDFC Securities

Gold prices rose after the US FOMC meeting as the US FED chairman kept a dovish stance keeping bond buying program unchanged. The higher inflation fears boosted buying in precious metals despite rally in equity indices. The FED signalled to keep interest rates near zero till 2023.

We expect gold prices to trade sideways to up for the day with COMEX spot gold support lies at $ 1,730 and resistance at $ 1,760. MCX Gold April support lies at Rs 44,800 and resistance lies at Rs 45,500.

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

International gold is trading marginally sideways to bearish momentum, where resistance is at $ 1,755-1,765 levels. Prices were taking support at the 15-SMA level in the morning session but have crossed and are sustaining below the same in the noon session. The support levels for the intraday may be expected in the range of $ 1,733-1,730.

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