Gold prices rise for 5th consecutive day to Rs 46,411/10 gm, silver up Rs 1,187 a kg


Gold prices rose for the fifth straight day by Rs 482 to Rs 46,411 per 10 gram in the Mumbai retail market on a continuing slump in Indian rupee and positive global trend.

The yellow metal was supported by US Fed reiterating its commitment to keep interest rates low for some more time amid weakness in US dollar and treasury yields.

The rate of 10 gram 22-carat gold in Mumbai was Rs 42,512 plus 3 percent GST, while 24-carat 10 gram was Rs 46,411 plus GST. The 18-carat gold quoted at Rs 34,808 plus GST in the retail market.

The Indian rupee has depreciated 3.08 percent to 74.59 from the March 22 low of 72.37.

The bullion price is supported by rising coronavirus cases which has forced countries to impose tighter restrictions hampering economic activity and loose monetary policy stance of major central banks.

Minutes of the Federal Reserve’s most recent policy meeting released yesterday provided no tailwinds for the metal. Federal Reserve officials saw it taking some time before conditions would be met for scaling back a massive monthly asset purchase program. 

Market participants will continue to keep an eye on the U.S. weekly jobless claims data scheduled later in the day.

“From an investment point of view, we are of the opinion that the current fall of approx 17-18% is a good buying opportunity. According to government sources, India’s March imports have risen multifold due to cut in tax and correction in price. We may see rise in jewellery buying in the coming weeks. Also, these are the best levels that one should start accumulating the gold for a year-end target of Rs 50,000”, said Jigar Trivedi, Research Analyst- Commodities Fundamental, Anand Rathi Shares & Stock Brokers.

The US dollar trades modestly lower at 92.30, or down 0.18 percent against a basket of six rival currencies. 

The US 10 year treasury yields trade flat at 1.64 percent in the evening session.

Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund fell 0.4 tonnes at 1028.69 tonnes, the lowest since April 2020.

Spot gold rose by $ 9.59 to $ 1,747.40 an ounce at 1218 GMT in London trading.

MCX Bulldesk jumped 93points or 0.64 percent, at 14,580 at 17:49. The index tracks the real-time performance of MCX Gold and MCX Silver futures.

Navneet Damani, Vice President, Motilal Oswal said, “Gold prices steadied after trading lower in yesterday’s session amidst positive economic data points from the US and as market participants weighed the US Federal Reserve’s commitment to keep interest rates low for some time against likely higher inflation.

“US Federal Reserve remained cautious about the continuing risks of the coronavirus pandemic and committed to pouring on monetary policy support until a rebound was more secure, minutes of the central bank’s March meeting showed. In the next couple of sessions, volatility could remain low as no major cues are expected to influence precious metal prices.” 

The broader range on COMEX could be between $ 1725- 1750 and on the domestic front, prices could hover in the range of Rs 46,000- 46,630. 

“COMEX gold regained from early session losses to trade near $ 1744/oz. Gold has bounced back amid weakness in the US dollar whereas bond yields steadied amid the lack of any fresh cues from FOMC minutes.

“Upbeat global growth outlook and continuing ETF outflows have capped the gains in gold. However, supporting price is rising virus cases, loose monetary policy stance of major central banks and improvement in consumer demand. Gold may witness choppy trade however general bias may be on the upside on dovish central bank stance”, said Ravindra Rao, VP- Head Commodity Research at Kotak Securities.

The gold/silver ratio currently stands at 69.04 to 1, which means the number of silver ounces required to buy one ounce of gold.

Silver prices surged by Rs 1,187 to Rs 67,219 per kg from its closing on April 7.

In the futures market, the gold rate touched an intraday high of Rs 46,720 and an intraday low of Rs 46,240 on the Multi-Commodity Exchange (MCX). For the June series, the yellow metal touched a low of Rs 44,108 and a high of Rs 51,924.

Gold futures for June delivery gained Rs 258, or 0.56 percent, at Rs 46,620 per 10 gram in evening trade on a business turnover of 12,294 lots. The same for August climbed Rs 276, or 0.59 percent, at Rs 46,879 on a business turnover of 910 lots.

The value of June and August’s contracts traded so far is Rs 2,768.44 crore and Rs 73.45 crore, respectively.

Similarly, Gold Mini contract for May soared Rs 252, or 0.55 percent at Rs 46,380 on a business turnover of 18,958 lots.

Trading Strategy

Tapan Patel, Senior Analyst (Commodities), HDFC Securities

Gold prices traded up as traders and investors tracked dollar and bond yields over FED minutes. The FED minutes showed that the central bank is committed to its ultra-low interest rates policy tracking US economic recovery. The dollar index traded weak on accommodative US FED stance boosting buying in gold.

We expect gold prices to trade sideways to up for the day with COMEX spot gold support lies at $ 1730 and resistance at $ 1760. MCX Gold June support lies at Rs 46,200 and resistance lies at Rs 46,700.

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

International gold is trading in a marginal sideways and bullish trend. Prices are sustaining above 50-SMA. Resistance is at $ 1,750-1,740 levels and prices are already trading in them. MCX Gold has rallied more than 250 points since morning. The bullish momentum has been witnessed since the market tested the major support of Rs 44,200-44,100 levels and we could expect prices to trade near Rs 47,000 in the upcoming session.

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