Gold prices soar above Rs 47,500/10 gm on domestic demand, geopolitical risk; silver jumps Rs 1,049 a kg


Gold prices continued an upward march on rupee weakness, positive global cues and improving demand ahead of the festive season as prices surged by Rs 590 to Rs 47,583 per 10 gram in the Mumbai retail market. The yellow metal was supported by a geopolitical crisis in Afghanistan, increasing Delta variant of coronavirus cases globally boosted safe-haven status.

The price of 10 gram, 22-carat gold in Mumbai was Rs 43,586 plus 3 percent GST, while 24-carat 10 gram stood at Rs 47,583 plus GST. The 18-carat gold is quoted at Rs 35,687 plus GST in the retail market.

“There is a pent up demand for gold coins owing to the unlocking of markets across the country, resulting in positive consumer sentiment driving spending and loosening purse strings for investments in Gold”, said Vikas Singh, Managing Director And Chief Executive Officer, MMTC-PAMP.

“We recorded 7x growth in Q1 FY22 against the previous year in sales of 24k, 999.9 purity Gold coins. With the onset of the festive season, we expect the sales to go up further”, he added.

The firm is India’s only precious metal refinery, accredited by the London Bullion Market Association for Gold and Silver offers multiple alternatives for investing in gold to benefit from the current gold prices. Customers can choose from traditional units like gold coins, and bars, or opt for dynamic products like Digital Gold, through it partners & distributors.

The focus is now on US retail sales data due later in the day as well as Fed Chairman’s speech tonight along with minutes of Fed’s July meeting on Wednesday for cues on the central bank’s stimulus tapering.

Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, dropped by 1.16 tonnes to 1,020.63 tonnes. The ETF has a market value of $ 58.60 billion.

A gauge for US dollar, Dollar Index jumped to 92.77, up 0.17 against rival currencies.

Spot gold moderately soared by $ 3.95 to $ 1,791.29 an ounce at 1205 GMT in London trading.

MCX Bulldesk advanced by 44 points or 0.31 percent, at 14,245 at 17:36. The index tracks the real-time performance of MCX Gold and MCX Silver futures.

“Gold prices continue to trade higher, hovering over the one-week peak, as the safe-haven demand amid rising Delta variant cases offset pressure from a firmer dollar. The number of new COVID-19 cases fuelled by the highly contagious Delta variant jumped about 81% over the past 14 days to 1.67 million cases in the US. China’s economic data points like retail sales slowed sharply and missing the expectations in July, as new COVID-19 outbreaks and floods disrupted business operations,” said Navneet Damani, VP – Commodities Research at Motilal Oswal Financial Services.

The broader range on COMEX could be between $ 1775- 1815 and on the domestic front, prices could hover in the range of Rs 47,235- 47,750.

“COMEX gold recovered from early losses to trade higher near $ 1796/oz. Earlier Gold had been pressurized by some hawkish Fed comments, persistent strength in US equities and continuing ETF outflows. However, supporting gold price is the disappointing US and Chinese economic data, rising virus cases and increasing tensions relating to Afghanistan. Gold may remain supported by increasing economic challenges and geopolitical risks however we need to see a break above $ 1800/oz for a sustained rise”, said Ravindra Rao, CMT, EPAT, VP- Head Commodity Research at Kotak Securities.

The gold/silver ratio currently stands at 74.42 to 1, which means 74.42 ounces of silver is required to buy an ounce of gold.

Silver prices rose by Rs 1,049 to Rs 63,936 per kg against its closing price on August 16.

In the futures market, the gold rate touched an intraday high of Rs 47,549 and an intraday low of Rs 47,184 on the Multi-Commodity Exchange (MCX). For the October series, the yellow metal touched a low of Rs 45,662 and a high of Rs 50,040. 

Gold futures for October delivery gained Rs 214, or 0.45 percent, to Rs 47,439 per 10 gram in evening trade on a business turnover of 12,351 lots. The same for December jumped Rs 178, or 0.38 percent, to Rs 47,580 on a business turnover of 1,704 lots.

The value of October and December’s contracts traded so far is Rs 1,917.62 crore and Rs 63.73 crore, respectively.

Similarly, Gold Mini contract for September edged higher Rs 217, or 0.46 percent at Rs 47,355 on a business turnover of 13,666 lots.

Trading Strategy

Tapan Patel- Senior Analyst (Commodities), HDFC Securities

Gold prices extended weekly gains witnessing recovery from day’s low in wake of disappointing economic data and worries over fast-spreading Delta variant cases. The fall in US bond yields supported the bullion rally which fell to 1.23% for the day.

We expect gold prices to trade sideways to up with COMEX spot gold resistance at $ 1,810 and support at $ 1,770 per ounce. MCX Gold October support lies at Rs 47,200 and resistance at Rs 47,700 per 10 gram.

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