Gold prices slightly dip to Rs 46,394/10 gm on global cues, ETF outflow; silver up Rs 416 a kg


Gold prices marginally eased by Rs 40 to Rs 46,394 per 10 gram in the Mumbai bullion market tracking weak global cues, ETF outflows, firm equity markets and rising treasury yields. However, the downside in the precious metal was capped by rupee depreciation and weakness in the dollar index.

The price of 10 gram, 22-carat gold in Mumbai was Rs 42,497 plus 3 percent GST, while 24-carat 10 gram stood at Rs 46,394 plus GST. The 18-carat gold is quoted at Rs 34,796 plus GST in the retail market.

“Gold prices witnessed strong recovery from recent lows last week ended in green halting the series of weekly declines. Gold prices were trading down at the start of the last week near $ 1,730 per ounce on increased expectations of US FED tapering. Gold prices recovered in the second half of the week supported by a fall in US bond yields despite stronger dollar. The additional support came from inflation worries with rising gas and coal prices which may result into higher input cost for the manufacturers or possible shutdowns”, Tapan Patel- Senior Analyst (Commodities), HDFC Securities.

After weak US jobless claims data market participants will focus on the US non-farm payroll and Service PMI data expected from major economies, later this week.

The CFTC data showed that money managers decreased their net long positions by 19471 lots in last week.

Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund fell by 3.49 tonnes to 986.54 tonnes. The ETF has a market value of $ 55.45 billion.

The US dollar index slumped to 93.76, down 0.30 percent against a basket of six rival currencies.

Spot gold tumbled by $ 8.23 to $ 1,752.73 an ounce at 12:24 GMT in London trading.

MCX Bulldesk decreased by 28 points or 0.20 percent at 13,795 at 17:55. The index tracks the real-time performance of MCX Gold and MCX Silver futures.

“Gold continues to trade above the $ 1750 mark after inching higher in the previous session, as weak economic data and mixed comments from fed officials weighed on U.S. dollar and yields. Philadelphia fed president Harker said that the fed may be close to meeting the inflation mandate, but there are some concerns regarding the employment goals in order to raise rates. While few others have shown optimism regarding the economy and stable inflation. Demand for physical gold also picked up in top consumer China last week and there was increased activity in other Asian hubs including Singapore,” said Navneet Damani, VP – Commodities Research at Motilal Oswal Financial Services.

The broader range on COMEX could be between $ 1730- 1772 and on the domestic front, prices could hover in the range of Rs 46,180- 46,820.

The gold-silver ratio currently stands at 77.32 to 1, which means 77.32 ounces of silver is required to buy an ounce of gold.

Silver prices rose by Rs 416 to Rs 59,997 per kg against its closing price on October 1.

In the futures market, the gold rate touched an intraday high of Rs 46,624 and an intraday low of Rs 46,341 on the Multi-Commodity Exchange (MCX). For the December series, the yellow metal touched a low of Rs 45,705 and a high of Rs 48,899. 

Gold futures for December delivery slipped Rs 81, or 0.17 percent, to Rs 46,425 per 10 gram in evening trade on a business turnover of 13,523 lots. The same for February slides by Rs 101, or 0.22 percent, to Rs 46,613 on a business turnover of 534 lots.

The value of December and February’s contracts traded so far is Rs 1,130.15 crore and Rs 44.34 crore, respectively.

Similarly, the Gold Mini contract for November fell Rs 56, or 0.12 percent at Rs 46,365 on a business turnover of 16,621 lots.

Trading Strategy

Tapan Patel- Senior Analyst (Commodities), HDFC Securities

We expect gold prices to trade sideways to down with COMEX spot gold resistance at $ 1770 and support at $ 1740 per ounce. MCX Gold December support lies at Rs. 46200 and resistance at Rs.46700 per 10 gram.

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

Technically, International Gold is trading with a negative note near $ 1,750. On the domestic front, we may witness a marginal sideways and negative momentum till the US market opens in the evening, after which volatility could be expected.

Anand Rathi Investment Services

MCX Gold December futures are expected to trade in the range of Rs 46,300-46,900 per 10 gram for the day.

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