Gold prices rose by Rs 357 to Rs 48,534 per 10 gram in the Mumbai retail market on safe-haven demand, however, the appreciating rupee capped further gains. The precious metal traded higher due to crash in cryptocurrencies, dip in Treasury yields and dollar index.
The rate of 10 gram 22-carat gold in Mumbai was Rs 44,457 plus 3 percent GST, while 24-carat 10 gram was Rs 48,534 plus GST. The 18-carat gold quoted at Rs 38,401 plus GST in the retail market.
The minutes of the Federal Reserve’s April monetary policy meeting showed that with the momentum building in the US economy, the committee will begin discussing a plan for adjusting the pace of asset purchases.
Market players today will keep an eye on the US weekly jobless claims data scheduled later in the day.
The US dollar dropped below 90-mark at 89.98 or down 0.23 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 tonnes to 1,031.27 tonnes.
Spot gold was slightly lower by $ 0.61 to $ 1,869.01 an ounce at 12:20 GMT in London trading.
MCX Bulldesk slumped 87 points or 0.57 percent, at 15,190 at 17:50. The index tracks the real-time performance of MCX Gold and MCX Silver futures.
Gold continues to trade in a range, hovering around three-month highs, as tapering talks from the US Federal Reserve bolstered the dollar and US yields, weighing on the metal. Minutes of the U.S. central bank’s meeting said several policymakers thought if the U.S. economy continued rapid progress, it would be appropriate “at some point” to discuss tightening its accommodative policy”, Navneet Damani, VP – Commodities Research, Motilal Oswal Financial Services said.
“As inflation is rising at a significant rate there is news regarding tapering as well. Rising inflation and rising Covid cases are supporting the metal prices although any further comments or action by the Fed in terms of change in policy could weigh in on the metal”, Damani added.
The broader range on COMEX could be between $ 1860- $ 1905 and on the domestic front, prices could hover in the range of Rs 48,450- Rs 49,050.
“COMEX gold trades lower near $ 1867/oz. Gold came under pressure as FOMC minutes noted that discussions over tapering of bond purchases have begun even as the central bank continues with an accommodative stance. ETF outflows also show profit taking by investors. However, supporting price is choppiness in the financial market amid inflation concerns and concerns about China’s commodity purchases. Gold rallied sharply in the last few days; however, lack of any positive trigger from FOMC minutes may make it vulnerable to some profit-taking”, said Ravindra Rao, CMT, EPATVP-Head Commodity Research, Kotak Securities Ltd.
The gold/silver ratio currently stands at 67.84 to 1, which means 67.84 ounces of silver is required to buy an ounce of gold.
Silver prices jumped by Rs 441 to Rs 71,541 per kg against its closing price on May 19.
In the futures market, the gold rate touched an intraday high of Rs 48,619 and an intraday low of Rs 48,269 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 fell Rs 336, or 0.69 percent, to Rs 48,338 per 10 gram in evening trade on a business turnover of 6,213 lots. The same for August slipped Rs 399, or 0.81 percent, to Rs 48,800 on a business turnover of 8,446 lots.
The value of June and August’s contracts traded so far is Rs 1,650.58 crore and Rs 509.75 crore, respectively.
Similarly, Gold Mini contract for June edged lower by Rs 286, or 0.59 percent at Rs 48,374 on a business turnover of 12,062 lots.
Trading Strategy
Tapan Patel, Senior Analyst (Commodities), HDFC Securities
Gold prices traded higher as the crash in cryptocurrencies and Fed minutes speculation boosted buying as a safe-haven asset. Major central banks have flagged worries over higher inflation which may support bullion prices to trade firm. Gold prices attracted safe-haven buying on slower economic recovery with rising cases in Asia.
We expect gold prices to trade sideways to up for the day with COMEX gold support at $ 1,860 and resistance at $ 1,900 per ounce. MCX Gold June support lies at Rs 48,300 and resistance at Rs 49,000 per 10 gram.
Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited
International gold is trading with marginal sideways and positive bias. It breached the major resistance of $ 1,870-$ 1,880 during yesterdays’ session but was unable to sustain above them. On the MCX, prices have declined more than 300 points and made a low at Rs 48,321 which could act as intraday support for the market. We may expect a rise in prices during the evening session.
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