Gold prices fall for second day to Rs 49,002/10 gm on stronger rupee, ETF outflow; silver slips

The value of August and October’s contracts traded so far is Rs 3,039.01 crore and Rs 533.77 crore, respectively.

The value of August and October’s contracts traded so far is Rs 3,039.01 crore and Rs 533.77 crore, respectively.

Gold prices slid for the second day by Rs 216 to Rs 49,002 per 10 gram at Mumbai retail market on firm rupee and weak global trend. The yellow metal was pressured by an uptick in Treasury yield and dollar following Fed officials’ comment on tapering stimulus and ETF outflow.

The rate of 10 gram 22-carat gold in Mumbai was Rs 44,886 plus 3 percent GST, while 24-carat 10 gram was Rs 49,202 plus GST. The 18-carat gold quoted at Rs 36,752 plus GST in the retail market.

Market participants continue to look at economic data and central banks comment to gauge whether economic growth and inflationary pressures are strong enough to warrant monetary tightening by central banks.

The beige book survey released by Fed showed optimism regarding US economic growth even after inflation concern and hiring difficulties.

The US dollar jumped to 90.12, up 0.25 percent against a basket of six rival currencies.

Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, declined by 4.1 tonnes to 1,041.75 tonnes. The ETF has a market value of $ 63.70 billion.

Spot gold dropped by $ 15.85 to $ 1,892.39 an ounce at 12:16 GMT in London trading.

MCX Bulldesk decreased 155 points or 1.01 percent, at 15,228 at 15:47. The index tracks the real-time performance of MCX Gold and MCX Silver futures.

“Gold prices edged lower as latest comments from Fed officials for clues on a potential time frame for tapering stimulus and an uptick in the dollar weighed on the safe-haven metal. Market participants are advised to trade cautious as important US private payroll data and weekly jobless claims data scheduled later today on the economic calendar, which could give further cues on economic recovery and the non-farm payroll data scheduled tomorrow”, said Navneet Damani, VP – Commodities Research, Motilal Oswal Financial Services.

The broader range on COMEX could be between $ 1892- $ 1918 and on the domestic front, prices could hover in the range of Rs 49,450- Rs 49,900. 

“COMEX gold trades lower near $ 1897/oz. Gold has turned choppy along with the US dollar and equity market amid uncertainty about the future monetary policy stance of major central banks. ETF outflows show weaker investor buying interest while concerns persist about Indian demand amid higher price and virus-related restrictions. Gold may remain choppy along with US dollar and equity markets; however, the general bias may be on the upside unless the US dollar recovers sharply”, said Ravindra Rao, CMT, EPAT, VP-Head Commodity Research at Kotak Securities.

The gold/silver ratio currently stands at 68.78 to 1, which means 68.78 ounces of silver is required to buy an ounce of gold.

Silver prices dipped by Rs 111 to Rs 71,240 per kg against its closing price on June 2.

In the futures market, the gold rate touched an intraday high of Rs 49,644 and an intraday low of Rs 49,048 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 slipped Rs 480, or 0.97 percent, to Rs 49,121 per 10 gram in evening trade on a business turnover of 12,074 lots. The same for October tanked Rs 541, or 1.08 percent, to Rs 49,440 on a business turnover of 1,623 lots.

The value of August and October’s contracts traded so far is Rs 3,039.01 crore and Rs 533.77 crore, respectively.

Similarly, Gold Mini contract for July edged lower by Rs 450, or 0.91 percent at Rs 48,899 on a business turnover of 14,696 lots.

Trading Strategy

Tapan Patel, Senior Analyst (Commodities), HDFC Securities

Gold prices traded below $ 1900 as investors weighed FED comments digesting weak Chinese data. The US FED officials said to scale back bond-buying slowly when the economy has made substantial progress. The traders and investors will await today’s US ADP payroll data in the evening session. The dollar index gained for the second day above 90 and was trading 0.21% up for the day.

We expect gold prices to trade sideways to lower for the day with COMEX gold support at $ 1,880 and resistance at $ 1,910 per ounce. MCX Gold August support lies at Rs 48,950 and resistance at Rs 49,600 per 10 gram.

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

Technically, International Gold is trading with bearish momentum near $ 1,900 levels and may continue to decline and test the support of $ 1,892-1,885 levels. On the MCX, Gold August fell more than 400 points and the market declined from the resistance of Rs 49,550-Rs 49,750 levels. A price rise could be witnessed in the evening session till Rs 49,400 levels on the upside.

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