Gold prices modestly rose by Rs 82 to Rs 47,411 per 10 gram in the Mumbai retail market on safe-haven appeal due to coronavirus delta variant, positive global trend and dollar weakness. The yellow metal traded positive as investors were wary of global growth and US Federal Reserve’s symposium later this week.
The price of 10 gram, 22-carat gold in Mumbai was Rs 43,428 plus 3 percent GST, while 24-carat 10 gram stood at Rs 47,411 plus GST. The 18-carat gold is quoted at Rs 35,558 plus GST in the retail market.
Jigar Trivedi, Research Analyst- Commodities Fundamental, Anand Rathi Shares and Stock Brokers, said, “Federal Reserve Chairman Powell will speak Friday at the Fed’s annual Jackson Hole conference, with investors looking for any details on the central bank’s plans for tapering its massive asset purchases program. Other important releases include the ECB meeting minutes, Q2 GDP updates for the US and flash Markit PMI data for the US, UK, Eurozone and Japan. Investors also await data on US personal spending and durable goods orders, Eurozone consumer morale, and China industrial profits. Amid the weak dollar, we expect MCX Gold October futures to appreciate to Rs. 47,350per 10 gram.”
According to US CFTC data, speculators raised their net long positions in COMEX gold by 26,636 contracts to 77,649 contracts for the week to August 17.
Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund declined by 3.49 tonnes to 1,011.61 tonnes. The ETF has a market value of $ 57.84 billion.
The US dollar index fell marginally to 93.25, down 0.27 percent against a basket of six rival currencies..
Spot gold jumped by $ 12.03 to $ 1,793.15 an ounce at 1225 GMT in London trading.
MCX Bulldesk advanced by 74 points or 0.53 percent at 14,162 at 17:57. The index tracks the real-time performance of MCX Gold and MCX Silver futures.
“Gold prices edged higher amidst the growing concerns over the economic fallout from the spread of the Delta coronavirus variant although the gains were capped as the dollar held near recent highs. Dallas Fed President Kaplan, who till now have supported among the Fed’s tapering action said last week that he may need to adjust that view if the Delta variant slows economic growth materially,” said Navneet Damani, VP – Commodities Research at Motilal Oswal Financial Services.
“In this important week, a cautious approach is advised as market participants will focus on the Fed’s annual economic symposium in Jackson Hole, Wyoming, scheduled later this week. Speech from Governor J. Powell regarding the economic outlook, tapering measures and any changes in the current policy will be in focus. Apart from that, few important data points like U.S. Core PCE, preliminary Manufacturing and Service PMI data from major economies will also be important to watch for”, he added.
The broader range on COMEX could be between $ 1770- 1820 and on the domestic front, prices could hover in the range of Rs 46,965- 47,580.
“COMEX gold continues to trade with marginal gains near $ 1789/oz. Gold is supported by a correction in the US dollar index, rising virus cases, the slowdown in the Chinese economy and geopolitical tensions relating to Afghanistan. However, weighing on price is weaker investor interest as is evident from ETF outflows and stability in equities after recent losses. Gold may continue within a narrow range amid mixed factors however a sharp rise is unlikely until it breaks past the $ 1800/oz level,” said Ravindra Rao, CMT, EPAT, VP- Head Commodity Research at Kotak Securities.
The gold-silver ratio currently stands at 75.60 to 1, which means 75.60 ounces of silver is required to buy an ounce of gold.
Silver prices soared by Rs 472 to Rs 62,705 per kg against its closing price on August 20.
In the futures market, the gold rate touched an intraday high of Rs 47,460 and an intraday low of Rs 47,149 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 286, or 0.61 percent, to Rs 47,444 per 10 gram in evening trade on a business turnover of 12,050 lots. The same for December rose Rs 274, or 0.58 percent, to Rs 47,580 on a business turnover of 2,184 lots.
The value of October and December’s contracts traded so far is Rs 1,323.33 crore and Rs 64.94 crore, respectively.
Similarly, Gold Mini contract for September edged higher Rs 249, or 0.53 percent at Rs 47,359 on a business turnover of 11,636 lots.
Trading Strategy
Tapan Patel- Senior Analyst (Commodities), HDFC Securities
Gold prices held a firm trading range supported by a weaker dollar and economic growth worries. The dollar index was trading around 0.25% lower in the morning trade. Gold prices may also get support from rising COVID cases in China, the US and Japan along with other parts of the world.
We expect gold prices to trade sideways to up with COMEX spot gold resistance at $ 1,800 and support at $ 1,770 per ounce. MCX Gold October support lies at Rs 46,900 and resistance at Rs 47,500 per 10 gram.
Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited
International gold prices are trading with a positive bias over the support level of $ 1,785-1,787 on Monday, with the support of the US Dollar remaining near multi-month highs. Concerns over the spread of COVID-19 and its impact on the economic recovery, however, drew investors to the yellow metal. On the domestic front, the key support would be near the previous session’s low at Rs 47,072 and if the price breaks below this level, we may anticipate a price fall towards Rs 46,975.
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