Gold prices slipped by Rs 455 to Rs 47,351 per 10 gram in the Mumbai retail market on sharp appreciation in rupee and subdued global trend. However, the surging coronavirus cases, stronger yields and hopes of the US Federal Reserve’s dovish stance capped the downside.
India continues to record the world’s highest daily tally of COVID-19 infections, which has also forced the country to take stricter measures to curb the spread of the same. These restrictions and rise in cases could hamper the physical demand.
The rate of 10 gram 22-carat gold in Mumbai was Rs 43,374 plus 3 percent GST, while 24-carat 10 gram was Rs 47,351 plus GST. The 18-carat gold quoted at Rs 35,513 plus GST in the retail market.
“Gold price is facing resistance and stores getting shut and cases going up due to pandemic is creating a negative sentiment. Only urgent buying of weddings are happening. One of the most auspicious seasons of Akshay Tritiya in mid-May is also under uncertainty and consumer demand will get affected,” said Suvankar Sen, CEO, Senco Gold and Diamonds.
Speculators raised their bullish positions in COMEX gold in the week to April 20, the US Commodity Futures Trading Commission said on Friday.
The dollar softness and gains in bond yields reflect the conundrum ahead of the FOMC decision this week. The Fed is largely expected to keep monetary policy unchanged and may reiterate the need for keeping the interest rate low for a long time.
The US dollar trades flat at 90.87 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 the fourth day at 1,021.7 tonnes.
Spot gold eased by $ 6.37 to $ 1,770.73 an ounce at 1227 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.
“Gold prices inched higher, helped by a soft dollar ahead of the U.S. Federal Reserve policy meeting this week. The Fed’s next meeting ends on April 28, and while no major policy changes are expected, investors are paying close attention to comments regarding liquidity measures and inflation. U.S. factory activity powered ahead in early April, while retail sales jumped to a record in March and hiring accelerated,” said Navneet Damani, Vice President, Motilal Oswal.
The broader range on COMEX could be between $ 1,772- 1,797 and on the domestic front, prices could hover in the range of Rs 47, 350- 47,780.
“COMEX gold trades little changed near $ 1780/oz. Gold is struggling to break past the key $ 1800/oz level. Support from the weaker US dollar, rising virus cases and loose monetary policy stance of major central banks are countered by some upbeat economic readings, general progress on vaccination and weaker investor interest. Gold may remain choppy ahead of Fed decision; however, general bias is still positive amid persistent weakness in the US dollar,” said Ravindra Rao, CMT, EPAT, VP- Head Commodity Research at Kotak Securities.
The gold/silver ratio currently stands at 69.20 to 1, which means the number of silver ounces required to buy one ounce of gold.
Silver prices tanked by Rs 727 to Rs 68,425 per kg from its closing on April 23.
In the futures market, the gold rate touched an intraday high of Rs 47,650 and an intraday low of Rs 47,253 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 237, or 0.50 percent, at Rs 47,295 per 10 gram in evening trade on a business turnover of 11,009 lots. The same for August declined Rs 238, or 0.50 percent, at Rs 47,595 on a business turnover of 2,956 lots.
The value of June and August’s contracts traded so far is Rs 1,789.71 crore and Rs 131.41 crore, respectively.
Similarly, Gold Mini contract for May slipped Rs 189, or 0.40 percent at Rs 46,980 on a business turnover of 13,466 lots.
Trading Strategy
Tapan Patel, Senior Analyst (Commodities), HDFC Securities
Gold prices were supported by weaker dollar and pandemic worries. The rising cases in India and Japan and other emerging markets boosted risk premium in the prices. The lower US bond yields also held grounds for gold prices. The traders and investors have weighed Fed’s dovish stance despite positive US economic data.
We expect gold prices to trade sideways to up for the day with COMEX gold support at $ 1760 and resistance at $ 1,800 per ounce. MCX Gold June support lies at Rs 47,200 and resistance at Rs 47,800 per 10 gram.
Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited
Technically, International gold is trading with marginal sideways and negative bias. Prices are trading below $ 1,800 levels and we may expect a downfall where the support of $ 1,765-1,760 could be tested. MCX June Gold has been trading with marginal negative bias since morning. Prices are trading below 50-SMA and may decline to Rs 47,000 levels in the upcoming session.
