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Gold Back Above Rs 51,000 Per 10 Gram After 14 Days, Silver Crosses Rs 61,000/Kg

Navneet Damani of Motilal Oswal, said the broader trend on COMEX could be in the range of $1,895-1,930 per troy ounce. "In the domestic market, prices could hover in the range of Rs 50,220-50,950."

Oct 6, 2020 / 08:51 PM IST

Gold prices rose by Rs 546 to Rs 51,044 per 10 gram in the Mumbai retail market on rupee depreciation and subdued global cues. The precious metal is trading flat, tracking a weak dollar and on worries over a global economic recovery.

The safe-haven dollar fell on expectations that US lawmakers will agree on a new stimulus to lessen the economic impact of coronavirus. The Dollar Index is trading lower at 93.39, down 0.16 percent.

Market participants will keep an eye on the speech by European Central Bank (ECB) and Federal Reserve Governor Jerome Powell later in the day. Also, investors are awaiting release of minutes from US Federal Reserve's September meeting on October 7, which could keep volatility high.

The bullion prices in the Indian market crossed the Rs 51,000 mark for the first time since September 21. While spot gold price in international market rallied over $1,900/oz, showing that the overall momentum is still positive.

The rate of 10 gram 18, 22 and 24-carat gold in Mumbai was Rs 38,283, Rs 46,756 and Rs 51,044, respectively, plus 3 percent GST. 

Close

Spot gold was trading up $4.78 at $1,918.20 an ounce at 12:01 GMT in London trading.

Gold holdings in SPDR ETF were unchanged at 1275.60 tonne. 

MCX iCOMDEX Bullion Index inched higher 83.70 points, or 0.54 percent, at 15,616.61 at 17:36 hours. The index tracks the real-time performance of MCX Gold and MCX Silver futures.

Navneet Damani, Vice President, Motilal Oswal, said the broader trend on COMEX could be in the range of $1,895-1,930 per troy ounce. "In the domestic market, prices could hover in the range of Rs 50,220-50,950."

“With general focus on the US economy and persisting challenges, the dollar is likely to remain under pressure. Hence, gold bulls might again get active if the price sustains above $1,920/oz,” said Ravindra Rao, VP-Head Commodity Research at Kotak Securities.

The gold-to-silver ratio currently stands at 85.52 to 1, which means the amount of silver required to buy one ounce of gold. The rise in the ratio indicates that gold has outperformed silver.

Silver prices surged Rs 1,001 to Rs 61,112 per kg from its closing on October 5.

In the futures market, the gold rate touched an intra-day high of Rs 50,940 and a low of Rs 50,468 on the Multi-Commodity Exchange (MCX). For the December series, the yellow metal touched a low of Rs 48,384 and a high of Rs 56,379.

Gold futures for December delivery gained Rs 269, or 0.53 percent, at Rs 50,895 per 10 gram in evening trade on a business turnover of 15,497 lots. The same for February jumped Rs 291, or 0.57 percent, at Rs 51,023 on a business turnover of 680 lots.

The value of the December and February’s contracts traded so far is Rs 2,993.64 crore and Rs 46.21 crore, respectively.

Similarly, Gold Mini contract for November edged higher Rs 241, or 0.48 percent, at Rs 50,945 on a business turnover of 10,565 lots.

Trading strategy

Sriram Iyer, Senior Research Analyst at Reliance Securities:

International gold prices are trading marginally higher on October 6 in Asia. Weaker dollar offsetting the pressure from improving risk sentiment as US President Donald Trump was discharged from hospital. Investors now await remarks from Federal Reserve Chairman Jerome Powell today. 

Technically, LBMA Gold Spot is struggling near the 21-Daily Moving Average which is placed at $1,915 levels and is sustaining below this level indicating a continued bearish trend in the counter. Downside $1,900-$1,886 will hold a support and resistance is at $1,915-$1,921 levels.

Domestic gold prices are trading higher this Tuesday evening trade. Technically, MCX Gold October contract is near its resistance zone around Rs 50,750-50,800 which can act as a hurdle for further upside movement as Rs 50,950 levels also hold a resistance. Prices could trade in a range of Rs 50,400-50,900 levels in coming sessions.

Tapan Patel- Senior Analyst (Commodities), HDFC Securities:

Gold prices traded higher with dollar decline and worries over global economic recovery. Prices fluctuated ahead of US Presidential election debate and rise in US treasury yields. We expect bullion prices to trade sideways to up for the day with COMEX gold resistance at $1,920 and $1,940, support at $1,890.

Anuj Gupta- DVP- Commodities and Currencies Research, Angel Broking:

On October 5, spot gold gained over 0.75 percent to close at $1,912.9 per ounce and spot silver ended higher by 2.7 percent to close at $24.4 per ounce. As for October 6, traders can buy gold at Rs Rs 50,300 levels with a stop-loss at of Rs 50,000 for a target of Rs 51,200 levels. We expect gold prices to trade sideways to down with COMEX gold support at $1,860 and resistance at $1,920. MCX Gold support lies at Rs 49,700, resistance at Rs 50,600.

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Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Sandeep Sinha
first published: Oct 6, 2020 08:51 pm

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