Gold prices climbed Rs 455 to 48,575 per 10 gram to hit a fresh high in the Mumbai bullion market on the back of a weakening rupee versus the dollar and strong global cues. The precious metal jumped to an eight year high in the international market on rising coronavirus cases globally and expectation of further stimulus from global central banks.
The rate of 10 gram 18, 22 and 24-carat gold in Mumbai was Rs 36,431, Rs 44,495 and Rs 48,575 plus 3 percent GST.
Sunilkumar Katke, Head of Commodities and Currency at Axis Securities, said gold prices have rallied from $1,700 to $1775 per troy ounce very quickly thanks to confusing statements on the status of the US-China trade deal, uncertainty around sustainability of the equity rally and falling 10-year bond yields.
The gold/silver ratio currently stands at 100.14 to 1, which means the amount of silver required to buy one ounce of gold.
Silver prices gained Rs 65 to Rs 48,505 per kg from its closing on June 23.
In the futures market, gold touched an intraday high of Rs 48,589 and an intraday low of Rs 48,242 on the Multi-Commodity Exchange (MCX). For the August series, the yellow metal touched a low of Rs 39,200 and a high of Rs 48,589.
Gold futures for August delivery gained Rs 152, or 0.32 percent, at Rs 48,384 per 10 gram in evening trade on a business turnover of 15,393 lots. The same for October delivery rose Rs 151, or 0.31 percent, at Rs 48,537 on a business turnover of 5,782 lots.
The value of the August and October contracts traded so far is Rs 3,621.83 crore and Rs 60.19 crore, respectively.
Similarly, Gold Mini contract for July climbed Rs 106, or 0.22 percent, to Rs 48,292 on a business turnover of 9,570 lots.
At 12:33 am (GMT), spot gold was up $2.38 at $1,770.72 an ounce in London trade. Ravindra Rao, VP- Head Commodity Research at Kotak Securities, expects the yellow metal to trade positive. But warns that sustenance above $1,790-1,792/oz is important for it to trade beyond $1800/oz.
Outlook for gold going forward Axis Securities’ Katke expects the trend to continue at least in the short term. He advices a buy on gold at Rs 48,400 per 10 gram with stop loss at Rs 48,250 and a target Rs 48,800. “We expect prices to touch Rs 50,000 per 10 gm soon breaking all its previous records.”
Debajit Saha, Senior Analyst, Precious Metals at Refinitiv, sees traction for paper gold going forward. "While sovereign gold bond does not involve any physical gold, gold ETF are backed by physical gold. This sudden increase in inflows could be attributed to the non-accessibility to physical gold in the domestic market due to the lockdown. Investors might continue to bet on these two products, while physical jewellery demand is not expected to return with any resurgence until the October quarter when festival and wedding demand kicks in."
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