Gold continues upward march after rising 5% in May; Silver jumps Rs 1,063 a kg

The value of August and October’s contracts traded so far is Rs 1,525.47 crore and Rs 169.55 crore, respectively.

The value of August and October’s contracts traded so far is Rs 1,525.47 crore and Rs 169.55 crore, respectively.

Gold prices on June 1 rose by Rs 287 to Rs 49,319 per 10 gram at Mumbai retail market on rupee depreciation and positive global trend. The precious metal surged Rs 2,241 or 4.79 percent in the domestic market during May on dollar weakness and growing inflationary pressures.

The rate of 10 gram 22-carat gold in Mumbai was Rs 45,176 plus 3 percent GST, while 24-carat 10 gram was Rs 49,319 plus GST. The 18-carat gold quoted at Rs 36,989 plus GST in the retail market.

The bullion metal continued to hold above the $ 1,900/oz level and firmness may continue unless there is a sharp recovery in the dollar.

Market participants’ focus this week will be on US payrolls data, due on Friday, with forecasts suggesting they will show an increase of 650,000. Investors today, will also keep an eye on the Manufacturing PMI data expected from major economies.

The US dollar weakened to 89.86, down 0.15 percent against a basket of six rival currencies. 

Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund fell 0.87 tonnes to 1,043.21 tonnes. The ETF has a market value of $ 63.70 billion.

Spot gold was slightly up by $ 1.35 to $ 1,908.63 an ounce at 11:58 GMT in London trading.

MCX Bulldesk jumped 116 points or 0.76 percent, at 15,403 at 17:28. The index tracks the real-time performance of MCX Gold and MCX Silver futures.

“Gold prices traded near a five-month high scaled last week, supported by a softer dollar and growing inflationary pressures, while investors awaited key U.S. data scheduled this week, that will provide a clearer picture on the overall economic growth. Last week, we witnessed U.S. consumer prices surging in April, with a measure of underlying inflation blowing past the Federal Reserve’s 2% target and posting its largest annual gain since 1992. Gold is considered as an inflation hedge, although Fed Governor, till now has underplayed the rising inflationary concerns”, said Navneet Damani, VP – Commodities Research, Motilal Oswal Financial Services.

The broader range on COMEX could be between $ 1,900-$ 1,925 and on the domestic front, prices could hover in the range of Rs 49,250- Rs 49,750.

“COMEX gold trades near $ 1910/oz. Gold is trading near Jan. highs supported by weakness in the US dollar and choppiness in the equity market amid continuing debate over inflation and monetary policy tightening. However, weighing on price is weakening ETF interest and weaker consumer demand in India owing to virus related restrictions. Gold may trade with a positive bias unless there is a substantial recovery in US dollar”, said Ravindra Rao, CMT, EPAT, VP-Head Commodity Research at Kotak Securities.

The gold/silver ratio currently stands at 68.10 to 1, which means 68.10 ounces of silver is required to buy an ounce of gold.

Silver prices soared by Rs 1,063 to Rs 72,413 per kg against its closing price on May 31.

In the futures market, the gold rate touched an intraday high of Rs 49,721 and an intraday low of Rs 49,433 on the Multi-Commodity Exchange (MCX). For the August series, the yellow metal touched a low of Rs 44,501 and a high of Rs 49,721.

Gold futures for August delivery gained Rs 258, or 0.52 percent, to Rs 49,607 per 10 gram in evening trade on a business turnover of 12,945 lots. The same for October rose Rs 303, or 0.61 percent, to Rs 49,965 on a business turnover of 851 lots.

The value of August and October’s contracts traded so far is Rs 1,525.47 crore and Rs 169.55 crore, respectively.

Similarly, Gold Mini contract for July jumped by Rs 294, or 0.60 percent at Rs 49,399 on a business turnover of 7,699 lots.

Trading Strategy

Tapan Patel, Senior Analyst (Commodities), HDFC Securities

Gold prices traded higher extending gains on mixed global cues as US and Europe markets will return from Holiday. Investors focused on the weaker dollar over better-than-expected China factory data. The dollar index was trading 0.18 percent lower in the morning trade.

We expect gold prices to trade sideways to higher for the day with COMEX gold support at $ 1,900 and resistance at $ 1,920 per ounce. MCX Gold August support lies at Rs 49,400 and resistance at Rs 49,900 per 10 gram.

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

Technically, International Gold is trading with marginal sideways and positive bias. It is trading above $ 1,900 levels and may continue to sustain above it in coming days. On the MCX, Gold August price is trading with bullish momentum and prices are sustaining above 20-SMA and we may expect them to rise during the evening session and trade above resistance zone of Rs 49,500-Rs 49,700.

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