Gold prices rise on safe-haven appeal, weak rupee; silver jumps Rs 1,057 a kg


Gold prices climbed by Rs 336 to Rs 47,814 per 10 gram at the Mumbai retail market on rupee depreciation and strong gains in the international market yesterday. The yellow metal rose on safe-haven demand as rising coronavirus cases is creating doubt and fears about the global economic revival.

The precious metal surged Rs 3,624 or 8.20 percent in the domestic market in April month so far.

The rate of 10 gram 22-carat gold in Mumbai was Rs 43,798 plus 3 percent GST, while 24-carat 10 gram was Rs 47,814 plus GST. The 18-carat gold quoted at Rs 35,861 plus GST in the retail market.

“Benchmark US 10-year Treasury yield was pinned below 1.6%. A bipartisan US congressional push to counteract China picked up steam as a Senate committee backed a bill pressing Beijing on human rights and economic competition and other lawmakers introduced a measure seeking billions for technology research”, Jigar Trivedi, Research Analyst- Commodities Fundamental, Anand Rathi Shares & Stock Brokers.

“Market participants await ECB meeting due later today and a US Federal Reserve policy meeting next week. MCX gold has appreciated by 5.45% in April and adding to the bullish tone, demand from China has bounced back from low levels, with Beijing pThe sentiment domestic and international banks to import large amounts of gold into the country. Sentiment is positive but we don’t deny profit booking also. Hence range would be Rs 48,000-48,400 for intraday”, he said. 

The US dollar trades marginally lower at 91.12, or down 0.01 percent against a basket of six rival currencies.

Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund was unchanged for second day at 1,021.7 tonnes.

Spot gold eased by $ 8.04 to $ 1,785.66 an ounce at 1239 GMT in London trading.

MCX Bulldesk dropped 129 points or 0.85 percent, at 15,000 at 18:10. The index tracks the real-time performance of MCX Gold and MCX Silver futures.

“Although COMEX gold trades mildly lower near $ 1788/oz it remains supported by lower bond yields, general weakness in the US dollar, worsening virus situation and rising US-Russia tensions. Investor buying needs to pick up if gold bulls need to keep price supported. With general weakness in the US dollar, gold may trade with a positive bias however a break above $ 1800/oz is needed to see extended gains”, said Ravindra Rao, VP- Head Commodity Research at Kotak Securities.

The gold/silver ratio currently stands at 68.50 to 1, which means the number of silver ounces required to buy one ounce of gold.

Silver prices jumped by Rs 1,057 to Rs 69,800 per kg from its closing on April 21.

In the futures market, the gold rate touched an intraday high of Rs 48,260 and an intraday low of Rs 47,726 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 slipped Rs 407, or 0.84 percent, at Rs 47,821 per 10 gram in evening trade on a business turnover of 11,175 lots. The same for August fell Rs 393, or 0.81 percent, at Rs 48,111 on a business turnover of 2,544 lots.

The value of June and August’s contracts traded so far is Rs 2,412.53 crore and Rs 75.83 crore, respectively.

Similarly, Gold Mini contract for May slumped Rs 383, or 0.80 percent at Rs 47,509 on a business turnover of 14,956 lots.

Trading Strategy

Tapan Patel, Senior Analyst (Commodities), HDFC Securities

Gold prices held a firm trading range on Thursday hovering above $ 1,790 per ounce. The yellow metal earlier rallied on pandemic worries as rising cases in Japan and India with partial lockdown added risk premium to the prices. Gold prices attracted safe-haven buying despite steady dollar and US bond yields.

We expect gold prices to trade sideways to up for the day with COMEX spot gold support lies at $ 1785 and resistance at $ 1800. MCX Gold June support lies at Rs 47,600 and resistance lies at Rs 48,200.

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