Gold prices plunged near Rs 46,500 per 10 gram as upbeat US jobs data increases the prospect of early tapering by the Federal Reserve. The dollar index and Treasury yields climbed higher denting gold’s safe-haven appeal.
The bullion metal – trading in a range since July – broke the psychologically important level of $ 1,800/oz saw intensified selling as it breached the crucial support of $ 1,780.
Tapan Patel- Senior Analyst (Commodities), HDFC Securities said, “Gold prices witnessed sharp selling on Friday evening following strong US private job numbers. The spot gold prices at COMEX were trading down by 2.31% to $ 1,762 per ounce while MCX Gold October futures fell by more than 2% to Rs 46,616 per 10 gram. Gold prices reacted to a better than expected rise in US Job numbers which fuelled expectations of sooner FED tapering.
Patel expects this panic selling to continue for a day or two with support at $ 1,750 per ounce and Rs 45,800 per 10 gram.
Democrat Senator Joe Manchin wrote a letter to Fed chief Jerome Powell stating that he had become “increasingly alarmed” that the Fed has continued to buy $ 120 billion per month in Treasury bonds and mortgage-backed securities, even with the recession triggered by the COVID pandemic over and “our strong recovery well underway,” Associated Press reported.
Manchin said he was urging the Fed “to immediately reassess our nation’s stance of monetary policy and begin to taper your emergency stimulus response.”
The US dollar climbed to 92.79, up 0.59 percent against a basket of six rival currencies. The jump in the dollar index makes gold expensive for holders of other currencies. While the Benchmark 10-year US T-bond yields up 7 basis points to 1.28 percent.
Spot gold tumbled by $ 42.72 to $ 1,761.85 an ounce at 1558 GMT in London trading. While spot silver fell 3.43 percent to $ 24.296/oz.
MCX Bulldesk crashed by 332 points or 2.29 percent, at 14,180 at 21:29. The index tracks the real-time performance of MCX Gold and MCX Silver futures.
The spot gold/silver ratio currently stands at 72.48 to 1, indicating that gold has outperformed silver.
Gold futures for October delivery corrected Rs 988, or 2.08 percent, to Rs 46,615 per 10 gram in evening trade on a business turnover of 14,123 lots. The same for December dropped Rs 973, or 2.04 percent, to Rs 46,835 on a business turnover of 1,027 lots.
Similarly, Gold Mini contract for September dived Rs 956, or 2.01 percent at Rs 46,695 on a business turnover of 18,091 lots.
Silver delivery for the September contract slumped by Rs 2,100, or 3.13 percent to Rs 64,898 per kg with a business turnover of 12,690 lots. The same for the December contract crashed by Rs 2,106, or 3.10 percent, to Rs 65,748 per kg with a turnover of 3,002 lots.
Meanwhile, Silver Mini contract for August edged lower Rs 1,973, or 2.93 percent at Rs 65,270 on a business turnover of 24,879 lots.