Gold prices slip for second day to Rs 47,350 per 10 gm on firm rupee; silver slides


Gold prices on August 26 fell for the second successive day, down by Rs 98 to Rs 47,350 per 10 gram in the Mumbai retail market on rupee strength and subdued global cues. The yellow metal traded lower as investors were cautious ahead of Jackson Hole Symposium that may provide insight about Fed’s bond tapering plan.

The price of 10 gram, 22-carat gold in Mumbai was Rs 43,373 plus 3 percent GST, while 24-carat 10 gram stood at Rs 47,350 plus GST. The 18-carat gold is quoted at Rs 35,513 plus GST in the retail market.

Fed Chair Jerome Powell is scheduled to speak tomorrow at the central bank’s annual economic symposium at Jackson Hole, Wyoming, which had to be moved online because of the US COVID-19 surge.

Market participants will be keeping an eye on the preliminary US GDP number.

Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, dropped by 2.91 tonnes to 1,001.72 tonnes. The ETF has a market value of $ 57.59 billion.

The US dollar index jumped to 92.92, up 0.09 percent against a basket of six rival currencies.

Spot gold marginally fell by $ 1.73 to $ 1,789.22 an ounce at 1219 GMT in London trading.

MCX Bulldesk slides by 28 points or 0.20 percent at 14,175 at 17:53. The index tracks the real-time performance of MCX Gold and MCX Silver futures.

“Gold continues to trade lower following strength in the dollar against its major crosses. The precious metal closed in the red after the durable goods number released from the US came in better-than-estimates. Riskier assets continued to trade higher after the House of Representatives passed the $ 3.5 trillion budget framework,” said Navneet Damani, VP – Commodities Research at Motilal Oswal Financial Services..

“Volatility in the last few sessions has been low as market participants await cues from the Jackson Hole Symposium that begins today. The expectation of a hawkish tone by the Fed Chairman could keep the dollar supported at lower levels and thereby weigh on the precious metal pack,” he added. 

The broader range on COMEX could be $ 1775- 1820 and on the domestic front, prices could hover in the range of Rs 46,865- 47,335.

The gold-silver ratio currently stands at 74.88 to 1, which means 74.88 ounces of silver is required to buy an ounce of gold.

Silver prices eased by Rs 152 to Rs 62,230 per kg against its closing price on August 25.

In the futures market, the gold rate touched an intraday high of Rs 47,229 and an intraday low of Rs 47,072 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 slide by Rs 28, or 0.06 percent, to Rs 47,151 per 10 gram in evening trade on a business turnover of 11,631 lots. The same for December dropped Rs 47, or 0.10 percent, to Rs 47,308 on a business turnover of 2,713 lots.

The value of October and December’s contracts traded so far is Rs 1,235.74 crore and Rs 69.54 crore, respectively.

Similarly, Gold Mini contract for September edged down Rs 20, or 0.04 percent at Rs 47,088 on a business turnover of 7,985 lots.

Trading Strategy

Tapan Patel- Senior Analyst (Commodities), HDFC Securities

Gold prices traded under pressure ahead of Jackson Hole Symposium where the market will try to get cues on asset tapering and interest rates change. The dollar index traded firm by 0.13 percent for the day which also added pressure on gold prices. 

We expect gold prices to trade sideways to down with COMEX spot gold resistance at $ 1800 and support at $ 1760 per ounce. MCX Gold October support lies at Rs 46,700 and resistance at Rs 47,400 per 10 gram.

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

Technically, International gold is trading with a negative bias below $ 1,800 level. The market is approaching the support of $ 1,780-1,770 levels. On the domestic front, MCX Gold October is trading with negative bias and tested the support of Rs 47,000-47,150 levels. If the support levels are breached with adequate volume, then we may witness prices trading near Rs 46,700-46,600 levels in the coming sessions.