Gold prices ease to Rs 46,791/10 gm, dip 2.12% for the week; silver slips Rs 660 a kg


Gold prices fell by Rs 139 to Rs 46,791 per 10 gram in the Mumbai retail market on firm Treasury yields, dollar and subdued global trend. The precious metal declined Rs 1,015 or 2.12 percent during the week in the domestic market on sharp appreciation in the rupee.

The rate of 10 gram 22-carat gold in Mumbai was Rs 42,861 plus 3 percent GST, while 24-carat 10 gram was Rs 46,791 plus GST. The 18-carat gold quoted at Rs 35,093 plus GST in the retail market.

Risk sentiments dampened precious metals view led by strong economic data. US GDP rose at 6.4 percent annual pace in the first quarter, up from 4.3 percent in the previous quarter.

The World Gold Council (WGC) said total gold demand for the quarter was at 815.7 metric tons, down 23 percent compared with the first quarter of 2020.

US President Biden proposed a new $ 1.8 trillion plan for families and education in a speech to a joint session of Congress, which will support the overall growth of the economy but also increase the already rising debt. 

Market participants will focus on the US Core PCE price index scheduled later in the day. 

The US dollar trades higher at 90.84 or up 0.27 percent against a basket of six rival currencies.

Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund fell by 4.7 to 1,017.04 after remaining steady for seven days.

Spot gold eased by $ 2.77 to $ 1,769.35 an ounce at 1152 GMT in London trading.

MCX Bulldesk marginally rose 11 points or 0.08 percent, at 14,625 at 17:23. The index tracks the real-time performance of MCX Gold and MCX Silver futures.

“Gold prices traded lower as positive US economic data and higher US Treasury yields dampened the metal’s appeal. US 10-year yields rose to a more than two-week high in the previous session. US economic growth accelerated in the Q1 as the government gave money to mostly lower-income households, increasing consumer’s purchasing power and setting the course for what is expected to be the strongest performance this year in nearly four decades”, said Navneet Damani, Vice President, Motilal Oswal. 

The broader range on COMEX could be between $ 1750- 1780 and on the domestic front, prices could hover in the range of Rs 46,550- 47,020.

“COMEX gold trades mixed near $ 1770/oz. Gold is choppy as Fed’s dovish stance is countered by increasing optimism about the US economy and this has led to volatility in the US dollar and bond yields. Concerns about rising virus cases, mixed economic data and hopes of additional stimulus measures are countered by concerns about India’s consumer demand and continuing ETF outflows.

“Gold may remain choppy unless there is a clear trend in the US dollar however buying interest may emerge at lower amid increasing emphasis on keeping interest rate low,” said Ravindra Rao, CMT, EPAT, VP- Head Commodity Research at Kotak Securities. 

The gold/silver ratio currently stands at 69.01 to 1, which means the number of silver ounces required to buy one ounce of gold.

Silver prices dipped by Rs 660 to Rs 67,800 per kg from its closing on April 29.

In the futures market, the gold rate touched an intraday high of Rs 46,819 and an intraday low of Rs 46,620 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 modestly gained Rs 25, or 0.05 percent, at Rs 46,751 per 10 gram in evening trade on a business turnover of 10,648 lots. The same for August jumped Rs 36, or 0.08 percent, at Rs 47,071 on a business turnover of 3,352 lots.

The value of June and August’s contracts traded so far is Rs 1,669.98 crore and Rs 62.56 crore, respectively.

Similarly, Gold Mini contract for May soared Rs 100, or 0.22 percent at Rs 46,500 on a business turnover of 1,963 lots.

Trading Strategy

Tapan Patel, Senior Analyst (Commodities), HDFC Securities

Gold prices pared early gains on US economic recovery with better than expected US GDP numbers. The rise in US bond yields also pressured gold prices to trade weak. The positive economic data from the US and ease in lockdown measures in Europe has capped upside in the yellow metal.  

We expect gold prices to trade sideways to down for the day with COMEX gold support at $ 1755 and resistance at $ 1790 per ounce. MCX Gold June support lies at Rs. 46400 and resistance at Rs. 47100 per 10 gram.

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