Gold prices surged by Rs 288 to Rs 47,534 per 10 gram in the Mumbai retail market following a sharp gain in the international market on Friday evening on weaker-than-expected US jobs data and rupee depreciation. The yellow metal traded in a narrow range amid a recovery in the dollar and the US market shut on account of the Labour Day holiday.
The price of 10 gram, 22-carat gold in Mumbai was Rs 43,541 plus 3 percent GST, while 24-carat 10 gram stood at Rs 47,534 plus GST. The 18-carat gold is quoted at Rs 35,651 plus GST in the retail market.
The economic calendar is fairly light this week, although comments from Fed officials and any update on Covid and geopolitical concerns will be in focus.
Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund were unchanged at 998.52 tonnes. The ETF has a market value of $ 58.52 billion.
The US dollar index traded higher at 92.26, up 0.25 percent against a basket of six rival currencies. The greenback had hit a one-month low of 91.95 on Friday
Spot gold marginally fell by $ 4.57 to $ 1,823.15 an ounce at 1236 GMT in London trading.
MCX Bulldesk slightly soared by 29 points or 0.21 percent at 14,170 at 18:02. The index tracks the real-time performance of MCX Gold and MCX Silver futures.
“Gold price continues to hover around a 2-month peak after a disappointing U.S. non-farm payroll data signalled that the Fed could push back the timeline for tapering stimulus measures, bolstering bullion’s appeal. U.S. nonfarm payrolls increased by 235,000 jobs last month versus the expectations of 728,000, as hiring in the leisure and hospitality sector stalled amid a resurgence in COVID-19 infections. Ease off in the tapering fears supported the prices, although better than expected unemployment rate put a slight cap on the metals’ gains. Governor Powell had hinted last month that reaching full employment was a pre-requisite for the central bank to start paring back its asset purchases. Imports last month on the domestic front were also reported quite strong ahead of the festive season,” said Navneet Damani, VP – Commodities Research at Motilal Oswal Financial Services.
The broader range on COMEX could be between $ 1805- 1845 and on the domestic front, prices could hover in the range of Rs 47,190- 47,775.
“COMEX gold trades marginally lower near $ 1826/oz. Gold eased as the US dollar paused after last week’s decline. Also weighing on price is weaker investor interest as is evident from ETF outflows. However, supporting price is disappointing US jobs report, persisting virus risks, China’s regulatory crackdown and geopolitical tensions relating to Afghanistan. Gold may witness choppy trade amid mixed factors however general weakness in the US dollar may continue to support”, said Ravindra Rao, CMT, EPAT, VP- Head Commodity Research at Kotak Securities.
The gold-silver ratio currently stands at 73.17 to 1, which means 73.17 ounces of silver is required to buy an ounce of gold.
Silver prices rose by Rs 1,482 to Rs 64,957 per kg against its closing price on September 3.
In the futures market, the gold rate touched an intraday high of Rs 47,497 and an intraday low of Rs 47,390 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 slipped Rs 124, or 0.26 percent, to Rs 47,400 per 10 gram in evening trade on a business turnover of 10,080 lots. The same for December slide by Rs 79, or 0.17 percent, to Rs 47,558 on a business turnover of 4,469 lots.
The value of October and December’s contracts traded so far is Rs 1,144.66 crore and Rs 160.44 crore, respectively.
Similarly, the Gold Mini contract for October dropped Rs 95, or 0.20 percent at Rs 47,439 on a business turnover of 13,984 lots.
Trading Strategy
Tapan Patel- Senior Analyst (Commodities), HDFC Securities
Gold prices traded off the two months high on Monday witnessing some selling on dollar recovery. The dollar index was trading around 0.23% up by noon session capping upside in Gold. Gold prices have kept the upper trading range with choppy trading on Monday in absence of US markets on account of Labour Day Holiday. Earlier, the yellow metal rallied following lesser than expected US private payroll data.
We expect gold prices to trade sideways to up with COMEX spot gold resistance at $ 1833 and support at $ 1815 per ounce. MCX Gold October support lies at Rs 47,200 and resistance at Rs 47,700 per 10 gram.
Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited
Technically, International Gold is trading flat since morning. Prices rallied more than 600 points in the previous session and tested a resistance zone of Rs 47,500-47,700. We may expect the prices to trade with bullish momentum in the evening session and trade above the resistance zone in the coming session.
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