Gold trades flat at Rs 48,553/10 gm on rupee appreciation, rises 1.67% for the week, silver declines


Gold prices were steady at Rs 48,553 per 10 gram in the Mumbai retail market on continuing appreciation in rupee and rally in equity markets. The optimism around a swift US economic recovery lifted appeal for riskier assets although precious metal recovered due to a weaker dollar and growing inflationary pressure limited losses and is on track for a third straight weekly rise.

The precious metal ended the week with a gain of Rs 796 or 1.67 percent in the domestic market.

The rate of 10 gram 22-carat gold in Mumbai was Rs 44,475 plus 3 percent GST, while 24-carat 10 gram was Rs 48,553 plus GST. The 18-carat gold quoted at Rs 38,415 plus GST in the retail market.

US Labour Department reported that the number of Americans filing new claims for unemployment benefits fell below 450,000 last week; however a Philadelphia Fed gauge of regional factory activity declined to 31.5 in May from April’s 50.2.

The outlook for the United States and European economies have improved amid progress on coronavirus related situation also weighed on bullion metal. The safe-haven appeal also subsided as Egypt brokered peace ceasefire came into force in Gaza Strip to halt 11 days of the conflict. 

Market players will keep an eye on the preliminary US Manufacturing and Service PMI data scheduled later in the day.

The US dollar modestly rose to 89.90, up 0.13 percent against a basket of six rival currencies after hitting the low of 89.63, the lowest level since January 8. The dollar index and gold share inverse co-relation and the fall in the value of dollar in the recent weeks have had a fair share of optimism in gold prices.

Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund soared by 5.8 tonnes to 1,037.09 tonnes. 

Spot gold was slightly up by $ 3.18 to $ 1,880.28 an ounce at 12:08 GMT in London trading.

MCX Bulldesk dropped 47 points or 0.31 percent, at 15,200 at 17:39. The index tracks the real-time performance of MCX Gold and MCX Silver futures.

“Gold continues to trade in a range, as optimism around a swift economic recovery and Fed officials comments in the FOMC minutes lifted appeal for riskier assets, growing inflationary pressure and rising concern regarding the pandemic limited losses and kept bullion on track for a third straight weekly rise,” Navneet Damani, VP – Commodities Research, Motilal Oswal Financial Services said.

The broader range on COMEX could be between $ 1,855- 1,905 and on the domestic front, prices could hover in the range of Rs 48,250- 48,850.

“COMEX gold trades marginally lower near $ 1,878/oz recovering from early session losses. Capping the gains in gold is stability in the equity market, easing Israel-Palestine tensions, the prospect of monetary tightening discussion by Fed and concerns about Indian consumer demand. However, supporting price is ETF inflows, rising virus cases in Asia and mixed economic data from major economies and dovish comments from central bank officials. Gold may remain choppy with US dollar and equities as market players assess Fed’s monetary policy stance however failure to break past the $ 1900/oz level and prospect of tapering of bond purchases by Fed may make it vulnerable to profit-taking,” said Ravindra Rao, CMT, EPATVP-Head Commodity Research, Kotak Securities Ltd.

The gold/silver ratio currently stands at 68.14 to 1, which means 68.14 ounces of silver is required to buy an ounce of gold.

Silver prices eased by Rs 296 to Rs 71,245 per kg against its closing price on May 20.

In the futures market, the gold rate touched an intraday high of Rs 48,538 and an intraday low of Rs 48,336 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 dropped Rs 61, or 0.13 percent, to Rs 48,483 per 10 gram in evening trade on a business turnover of 6,125 lots. The same for August slides Rs 109, or 0.22 percent, to Rs 48,951 on a business turnover of 8,733 lots.

The value of June and August’s contracts traded so far is Rs 1,100.97 crore and Rs 358.96 crore, respectively.

Similarly, Gold Mini contract for June slipped by Rs 34, or 0.07 percent at Rs 48,485 on a business turnover of 12,312 lots.

Trading Strategy

Tapan Patel, Senior Analyst (Commodities), HDFC Securities

Gold prices shed some previous gains on profit-booking and are still heading for a third weekly gain. The higher inflation worries from major central banks have raised speculation over hawkish FED stance triggering some correction in the yellow metal. 

We expect gold prices to trade sideways to up for the day with COMEX gold support at $ 1860 and resistance at $ 1900 per ounce. MCX Gold June support lies at Rs. 48100 and resistance at Rs. 48900 per 10 gram.

Axis Securities

Axis Securities Axis Securities

MCX Gold price is trading under symmetrical triangle pattern, the price remains to trade higher. Any breakout above Rs 48,600 would push the price higher towards Rs 48,900/49,000 levels in intraday. The price is trading above 60 and 100 hourly EMA which is a bullish indicator.

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