Gold prices near Rs 48,000/10 gm on safe-haven appeal, FOMC minutes; silver soars


Gold prices climbed by Rs 497 to Rs 47,956 per 10 gram at the Mumbai retail market on firm global trend and decline in rupee. The precious metal regained $ 1,800/oz level on a weaker dollar and lower bond yield ahead of US FOMC meeting minutes to be released tomorrow.

The rate of 10 gram 22-carat gold in Mumbai was Rs 43,928 plus 3 percent GST, while 24-carat 10 gram was Rs 47,956 plus GST. The 18-carat gold quoted at Rs 35,967 plus GST in the retail market.

The bullion metal prices traded at higher levels after central banks increased their gold holdings. Investors are also looking for more economic data from the US to get a better sense of the Fed’s monetary policy.

Gold has also benefitted from safe-haven buying amid rising coronavirus concerns as authorities tighten restrictions to curb the spread of Delta variant.

The US dollar dropped to 92.34, down 0.07 percent against a basket of six rival currencies. The weaker greenback makes bullion metal attractive for other currency holders.

Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund was unchanged at 1,042.58 tonnes. The ETF has a market value of $ 59.84 billion.

Spot gold surged by $ 17.22 to $ 1,809.15 an ounce at 1220 GMT in London trading.

MCX Bulldesk increased 168 points or 1.15 percent, at 14,824 at 17:51. The index tracks the real-time performance of MCX Gold and MCX Silver futures.

“Gold rose above the $ 1,800 psychological level hitting a three week high, as a fall in the dollar and rising fear of COVID and its variants is supporting the metal prices. Market participants will keep an eye on the US Service PMI data scheduled later in the day, which if recorded lower than expectations could support bullion,” said Navneet Damani, VP – Commodities Research at Motilal Oswal Financial Services.

Tapan Patel- Senior Analyst (Commodities), HDFC Securities said, “Gold prices rallied giving breakout of short term resistance above $ 1800 per ounce. The weaker dollar and economic growth concerns over higher oil prices boosted buying in gold for the day. The dollar index was trading 0.21% down by noon session as the market is awaiting FED minutes on Wednesday.”

Patel expects gold prices to trade sideways to up for the day with COMEX gold support at $ 1,790 and resistance at $ 1,820 per ounce. MCX Gold August support lies at Rs 47,300 and resistance at Rs 48,000 per 10 gram.

The gold/silver ratio currently stands at 68.64 to 1, which means 68.64 ounces of silver is required to buy an ounce of gold.

Silver prices soared by Rs 213 to Rs 69,864 per kg against its closing price on July 5. 

In the futures market, the gold rate touched an intraday high of Rs 47,934 and an intraday low of Rs 47,350 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 627, or 1.33 percent, to Rs 47,926 per 10 gram in evening trade on a business turnover of 10,751 lots. The same for October jumped Rs 633, or 1.33 percent, to Rs 48,199 on a business turnover of 4,731 lots.

The value of August and October’s contracts traded so far is Rs 2,380.31 crore and Rs 171.67 crore, respectively.

Similarly, Gold Mini contract for August surged by Rs 561, or 1.19 percent at Rs 47,865 on a business turnover of 14,699 lots.

Trading Strategy

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

Technically, MCX Gold August opened on a positive note and is trading with bullish momentum. The market rallied more than 600 points since the previous close and we may expect the bullish momentum to continue in the upcoming session as well. After trading in a choppy manner in the previous two weeks, we may witness prices trading in the Rs 47,900-48,100 levels in the coming days.

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