Gold prices fell slightly by Rs 117 to Rs 44,886 per 10 gram in the Mumbai retail market as the US dollar surge to four-month high and muted global cues. However, the downside in yellow metal was capped by rising COVID cases across the world and geopolitical tension between the US and China increasing safe-haven appeal.
The rate of 10 gram 22-carat gold in Mumbai was Rs 41,116 plus 3 percent GST, while 24-carat 10 gram was Rs 44,886 plus GST. The 18-carat gold quoted at Rs 33,665 plus GST in the retail market.
US Federal Reserve Chair Jerome Powell said the economic recovery from the pandemic had progressed more quickly than generally expected and looks to be strengthening.
Market participants will keep an eye on the Preliminary Manufacturing and Service PMI data from major economies and comments from the US Fed.
The US dollar traded higher at 92.48, or up 0.14 percent against a basket of six rival currencies. The dollar index hit a fresh of 92.61 during the intraday, the highest level since November 23.
The US 10 year treasury yields eased to 1.62 percent, down 1 basis point following Fed’s comment on the economy.
Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund fell by 6.4 tonnes to 1045.36 tonnes, the lowest since April 2020.
Spot gold jumped marginally by $ 3.12 to $ 1,730.09 an ounce at 1200 GMT in London trading.
MCX Bulldesk increased 39 points or 0.28 percent to 14,138 at 17:31. The index tracks the realtime performance of MCX Gold and MCX Silver futures.
Navneet Damani, Vice President, Motilal Oswal said: “Gold prices eased a bit, as the dollar inched higher hovering near its two-week high after US Fed Chair Powell reassured Congress that inflation would not spiral out of control. Treasury Secretary Janet Yellen said the US economy remains at risk as she fielded lawmakers’ questions about possible infrastructure and tax increase plans under consideration.”
“On the other hand, US Treasury Secy. also mentioned that Fed will show “resolute patience” in waiting to meet its employment and inflation goals before pulling back on support for an economy still healing from the pandemic. The tussle between the US and China is definitely picking up pace, supporting metal prices.”
The broader range on COMEX could be between $ 1,720 and 1,765 and on the domestic front, prices could hover in the range of Rs 44,580- 45,100.
The gold/silver ratio currently stands at 68.94 to 1. This refers to the number of silver ounces required to buy one ounce of gold.
Silver prices declined by Rs 687 to Rs 65,100 per kg from its closing on March 23.
In the futures market, the gold rate touched an intraday high of Rs 44,879 and an intraday low of Rs 44,673 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 76, or 0.17 percent, at Rs 44,722 per 10 gram in evening trade on a business turnover of 7,637 lots. The same for June edged higher Rs 144, or 0.32 percent, at Rs 45,166 on a business turnover of 9,262 lots.
The value of the April and June’s contracts traded so far is Rs 1,945.79 crore and Rs 245.49 crore, respectively.
Similarly, Gold Mini contract for April rose Rs 101, or 0.23 percent at Rs 44,737 on a business turnover of 19,002 lots.
Trading Strategy
Tapan Patel, Senior Analyst (Commodities), HDFC Securities
Gold prices have kept downside limited on pandemic worries despite dollar rally. Earlier, the yellow metal witnessed selling on FED comments which boosted buying in the dollar. The US FED chairman said that the spike in inflation will be “one-off” as FED has enough tools to maintain a 2 percent target.
We expect gold prices to trade sideways to down for the day with COMEX spot gold support lies at $ 1,710 and resistance at $ 1,745. MCX Gold April support lies at Rs 44,500 and resistance lies at Rs 45,000.
Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited
International gold prices are trading with marginal bullish momentum, where resistance is at $ 1,750-1,740 levels. Prices are sustaining above support of $ 1,720-1,725. On the MCX, we may expect prices to fall and test support levels of Rs 44,650-44,570 during the upcoming session.
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