Gold rises for 3rd day to Rs 47,484/10 gm, crosses 100-day EMA and SMA; Silver dearer by Rs 1,535


Gold prices rose for the third straight day by Rs 492 to Rs 47,484 per 10 gram in the Mumbai retail market on May 7 owing to dollar depreciation, positive global cues and a sharp rally on May 6. The precious metal gave a strong breakout above 100 SMA and EMA and break past the $ 1,800/oz level.

The precious metal soared by Rs 693 or 1.48 percent during the week in the domestic market on safe-haven appeal as Treasury yields and dollar weakened.

The rate of 10 gram 22-carat gold in Mumbai was Rs 43,495 plus 3 percent GST, while 24-carat 10 gram was Rs 47,484 plus GST. The 18-carat gold quoted at Rs 35,613 plus GST in the retail market.

India’s imports of gold grew by a robust 245.4 percent to $ 17.8 billion during the March 2021 quarter. The growth in imports was higher when compared to the preceding quarter of December too. Imports during the March 2021 quarter were 77.9 percent higher than those during the December 2020 quarter.

The growth in gold imports during the March 2021 quarter was largely on account of a low base of the March 2020 quarter when the fast spread of the coronavirus pandemic had resulted in a 36.9 percent contraction in gold imports, said CARE Ratings.

Cleveland Fed president, in his speech, said that the economic outlook is brightening but more improvements are needed before the Federal Reserve starts scaling back monetary support.

Americans filing new claims for unemployment benefits fell below 500,000 last week for the first time since the onset of COVID-19 pandemic more than a year ago, showed Labour Department data.

Market participants will keep an eye on the U.S. non-farm and unemployment number scheduled later in the day; which, if recorded better than expectations, could put pressure on the metal prices.

The US dollar modestly fell to 90.90 or 0.03 percent against a basket of six rival currencies. The fall in the dollar index makes gold less expensive for holders of other currencies.

Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, was unchanged at 1,019.33 tonnes. 

Spot gold was slightly higher by $ 3 to $ 1,818.18 an ounce at 12:29 GMT in London trading.

MCX Bulldesk dipped 24 points or 0.16 percent, at 14,977 at 18:00. The index tracks the real-time performance of MCX Gold and MCX Silver futures.

“Gold prices edged higher surpassing its psychological resistance of $ 1800 and now hovering near a 2-1/2 month high, aided by a pullback in the dollar and Treasury yields as investors cautiously await U.S. non-farm payrolls data for further cues on the health of the world’s biggest economy. The dollar index slipped to a one-week low against its rival, while U.S. 10-year yields hovered close to a two-week low,” said Navneet Damani, Vice President, Motilal Oswal Financial Services (MOFSL). 

The broader range on COMEX could be between $ 1,805-$ 1,850 and on the domestic front, prices could hover in the range of Rs 47,470- Rs 48,200.

“COMEX gold trades higher near $ 1820/oz amid weaker US dollar, loose monetary policy stance of major central banks and Fed’s warning about stretched valuation in many asset classes. However, lack of investor interest and concerns about consumer demand in India might cap the gains. Gold may remain volatile along with gold as market players assess Fed’s monetary policy but the general bias remains positive. Focus for the day would be US non-farm payrolls data that might keep gold volatile”, said Ravindra Rao, CMT, EPAT, VP- Head Commodity Research at Kotak Securities. 

The gold/silver ratio currently stands at 67.03 to 1, which means 67.03 ounces of silver is required to buy an ounce of gold.

Silver prices surged by Rs 1,535 to Rs 70,835 per kg against its closing price on May 6.

In the futures market, the gold rate touched an intraday high of Rs 47,922 and an intraday low of Rs 47,520 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 soared Rs 326, or 0.68 percent, to Rs 47,921 per 10 gram in evening trade on a business turnover of 10,310 lots. The same for August advanced Rs 314, or 0.66 percent, at Rs 48,233 on a business turnover of 4,465 lots.

The value of June and August’s contracts traded so far is Rs 1,902.81 crore and Rs 153.13 crore, respectively.

Similarly, Gold Mini contract for June edged higher by Rs 281, or 0.59 percent at Rs 47,817 on a business turnover of 17,959 lots.

Trading Strategy

Tapan Patel, Senior Analyst (Commodities), HDFC Securities

Gold prices were boosted by a fall in the dollar index and a decline in US bond yields. The 10-year US Treasury yields fell to 1.56% on Thursday while the dollar index fell below 91-mark. Gold prices rose to 10-week highs, breaking the important resistance of $ 1800 while silver prices rallied with strong industrial metals on a higher demand outlook.

We expect gold prices to trade sideways to higher for the day with COMEX gold support seen at $ 1795 and resistance witnessed at $ 1840 per ounce. MCX Gold June support lies at Rs 47,400 while resistance is seen at Rs 48,000 per 10 gram.

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

International gold is trading with positive bias after breaching the psychological levels of $ 1,800 in the previous session. Prices are trading with bullish momentum and the same may continue for the evening session. On the MCX, gold has support at Rs 47,500-Rs 47,400 levels which could be tested again before prices rally for a bullish run.

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