Gold gains on safe-haven demand, experts say price may touch Rs 51,000

Gold prices rose Rs 105 to Rs 45,476 per 10 gram in India on May 7 on safe-haven demand due to disappointing economic data from the US and China. The metal is likely to take further cues from US jobless claims to be released later in the day.

Major gold-trading centres have remained shut in the country due to the lockdown announced to prevent the spread of coronavirus.

Gold was steady at around the $1,700 at Comex and around Rs 45,500 at MCX.

The rally is on hold as news on easing of lockdowns from across the world is strengthening the US dollar, attracting investors to riskier assets.

“Having given 12 percent returns YTD, the gold rally is expected to continue and soon we may see the prices near its year 2011 highs of $1,900-mark by August-September 2020, which in domestic denomination may touch Rs 51,000-mark per 10 grams,” said Sunilkumar Katke, Head of Commodities and Currency at Axis Securities Limited.

This bullish trend is mainly backed by the recession the pandemic has brought that has seen central banks slash interest rates to near-zero and shaken equity markets.

Hedge funds are also betting high on the metal as stimulus packages from countries to revive the economy will come at a cost of currency depreciation, adding to the safe-haven appeal of gold in the near future, he said.

Katke further said from a short-term perspective one should buy gold around Rs 45,400, maintain a stoploss at Rs 45,000-mark and hold it targeting Rs 46,000 levels in a day or two.

Comext gold was trading 0.60 percent higher after a 1.3 percent decline in the previous session.

Disappointing economic data from the US and China sent investors to the safe-haven metal. Interest rate cuts by global central banks and US- China tensions might support the prices, said Ravindra Rao, VP-Head Commodity Research, Kotak Securities.

Rao expects gold to trade in a narrow range until mixed triggers are present in the market, with prices affected by the firmness in the dollar and lifting of virus-related restrictions.

Gold pared losses on concerns about global economic recovery on weak data from the US and China, said Tapan Patel, Senior Analyst (Commodities), HDFC Securities.

In the US, private payrolls declined by 20.23 million in April 2020. The China Caixin services PMI reading reported contraction at 44.4 in April.

The gold/silver ratio currently stands at 112.46 to 1, which means the amount of silver required to buy one ounce of gold.

In the futures market, gold touched an intraday high of Rs 45,566 and an intraday low of Rs 45,340 on MCX. For the June series, the yellow metal touched a low of Rs 36,572 and a high of Rs 47,327.

Gold futures for delivery in June gained Rs 105, or 0.23 percent on the MCX trading at Rs 45,476 per 10 gram in evening trade in a business turnover of 13,671 lots. Gold contracts for August delivery rose Rs 119, or 0.26 percent, at Rs 45,714 per 10 gram in a business turnover of 6,778 lots.

The value of the June contract traded so far is Rs 1,439.89 crore and August contract saw the value of Rs 85.43 crore.

Similarly, Gold Mini contract for June was up Rs 93, or 0.20 percent at Rs 45,480 in a business turnover of 9,729 lots.

Silver futures for July was Rs 206, or 0.49 percent at Rs 42,051 with a business volume of 5,944 lots.

MCX Gold is having strong resistance at Rs 45,750 level on the higher side and intraday weakness is likely to continue as long as resistance level is held, according to Motilal Oswal.

The broking firm said spot gold will trade in the $1,675-1,710 range.

At 1215 pm GMT, spot gold was up by $9.08 at $1,694.64 an ounce in London trading.