Gold prices dipped Rs 192 to Rs 40,464 per 10 grams in Mumbai's bullion market on the appreciation of the rupee. The yellow metal will take further cues from the US Federal Reserve interest rate decision later tonight.
The rate of 10 grams, 22-carat gold in Mumbai was Rs 37,065 plus 3 percent GST, while that 10 grams, 24-carat gold was Rs 40,464 plus GST. The price of 18-carat gold was quoted at Rs 30,348 plus GST in the retail market.
According to Navneet Damani, Vice President, Motilal Oswal, gold prices saw a correction in yesterday’s session after the sell-off in the equities market took a pause. The fear of the coronavirus spreading and claiming more deaths still remains, and a fall in the yields of US 10 year Treasury note is supporting the yellow metal's prices at lower levels.
A brief profit booking was witnessed amid few US economic data points like consumer confidence and durables goods order which were recorded better than the expectations. All eyes will be on the Fed governor’s speech in the policy meet scheduled later this week.
Broader trend on Comex could be $1,560-1,580, and on domestic front, prices could hover in the range of Rs 39,950- 40,400, added Damani.
The US Fed kept interest rates steady in the last meeting after three straight cuts in anticipation that the US economy is not going into recession, and they wanted to maintain low-interest rates for a revival in the economic conditions. Gold prices are also likely to find support from expected dovish Fed comments, the spread of the coronavirus and geopolitical tensions in Iraq and Libya, said Abhishek Bansal, Chairman and MD, Abans Group of Companies.
He further added if we see an escalation in the situation from the current levels, then a significant rally could be seen in precious metals prices, which are considered as a safe-haven during such a scenario.
The gold/silver ratio, which is the amount of silver required to buy one ounce of gold, currently stands at 88.86 to 1.
Silver prices tumbled Rs 1,160 to Rs 45,535 per kg from its closing on January 28.
In the futures market, gold rates touched an intraday high of Rs 40,359 and an intraday low of Rs 40,066 on MCX. For the February series, the yellow metal touched a low of Rs 36,098 and a high of Rs 41,293.
Gold futures for delivery in February gained Rs 70, or 0.17 percent on the MCX trading at Rs 40,312 per 10 grams in the evening's trade for a business turnover of 4,286 lots.
Gold contracts for delivery in April rose Rs 43, or 0.11 percent, at Rs 40,416 per 10 grams in a business turnover of 17,641 lots. The far month June contract was trading up by Rs 42, or 0.10 percent at Rs 40,415 per 10 grams with a business volume of 1,463 lots.
The value of the February contracts traded so far is Rs 2,838.92 crore, and those of April contracts saw a value of Rs 1,539.59 crore.
Similarly, Gold Mini contracts for February rose Rs 69, or 0.17 percent at Rs 40,269 in a business turnover of 4,682 lots. Axis Securities advised its clients to sell February gold at Rs 40,350 with stoploss at Rs 40,450 and target of Rs 40,200.
MCX Gold has seen support at Rs 40,200-39,950, whereas resistance is at Rs 40,450-40,630. Range bound movement is expected for the day, according to Motilal Oswal.
The brokerage firm said spot gold has key support at $1,550 whereas resistance is at $1,590.
At 12:31 pm (GMT), spot gold was up $5.85 at $1,571.71 an ounce in London trading.