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Gold outperforms Nifty and Sensex in January, up 3.95%

The rate of 10 grams 22-carat gold in Mumbai was Rs 37,365 plus 3 percent GST, while 24-carat 10 gram was Rs 40,791 plus GST. The 18-carat gold quoted at Rs 30,593 plus GST in the retail market.

January 31, 2020 / 08:48 PM IST

Gold, with 3.95 percent gain, has outperformed benchmark Nifty (down 1.8 percent) and Sensex (down 1.6 percent) in January on safe-haven buying amid economic slowdown concerns due to the fast-spreading Coronavirus in China.

The virus has taken the lives of 213 people so far, with 9,809 confirmed cases as many countries stated plans to evacuate their nationals from Wuhan, the Chinese city at the centre of the outbreak.

Gold prices dipped Rs 57 to Rs 40,791 per 10 gram in the Mumbai bullion market on rupee appreciation. The yellow metal slipped after the World Health Organisation (WHO) came out against travel and trade restrictions in declaring global emergency over the spread of coronavirus that originated in China last year.

The rate of 10 grams 22-carat gold in Mumbai was Rs 37,365 plus 3 percent GST, while 24-carat 10 gram was Rs 40,791 plus GST. The 18-carat gold quoted at Rs 30,593 plus GST in the retail market.

According to Abhishek Bansal, Chairman and MD, Abans Group of Companies, Gold prices are marginally lower after the World Health Organization (WHO) said measures taken by China could control the coronavirus outbreak. The comments have eased fears among investors, and the risk premium has reduced marginally from gold. It is premature to predict the actual impact of the coronavirus.

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Fed Chairperson Jerome Powell is acknowledging the risks of a short-term slowdown in China due to the virus. Still, the economic impact is not quantifiable; if we see an escalation in the situation from the current levels, then a significant rally could be seen in precious metal prices, which are considered as a safe-haven during such a scenario.

The virus has claimed 213 lives so far in China and has spread to at least 22 countries. Many cities in China are still facing a lockdown, and business activities are closed completely. Gold is considered a safe-haven during such situations.

The gold/silver ratio currently stands at 87.92 to 1, which means the amount of silver required to buy one ounce of gold.

Silver prices jumped Rs 225to Rs 46,395 per kg from its closing on January 30. The precious metal has gained Rs 634, or 1.58 percent for the week, while silver rose Rs 250 or 0.54 percent in the same period.

In the futures market, gold rate touched an intraday high of Rs 41,014 and an intraday low of Rs 40,571 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 eased Rs 224, or 0.55 percent on the MCX trading at Rs 40,751 per 10 gram in evening trade in a business turnover of 575 lots. Gold contracts for April delivery slipped Rs 268, or 0.65 percent, at Rs 40,805 per 10 gram in a business turnover of 19,231 lots. The far month June contract was trading down by Rs 238, or 0.58 percent at Rs 40,930 per 10 gram with a business volume of 4,293 lots.

The value of the February contract traded so far is Rs 2,326.75 crore and April contract saw the value of Rs 2,326.79 crore.

Similarly, Gold Mini contract for March slipped Rs 210, or 0.51 percent at Rs 40,710 in a business turnover of 8,139 lots.

The gold price has seen a strong pullback after testing 50 percent retracement level and the price is expected to trade positive. Sustaining above Rs 40,820 next leg of the positive rally would push the price higher towards Rs 41,000-41,100 levels, according to Axis Securities.

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On an hourly chart, the price has been trading above 60 EMA which is a bullish sign for price.

The broking firm advised its clients to April gold at Rs 40,820 with stop loss at Rs 40,700 and target of Rs 41,000.

MCX Gold has support at Rs 40,640-40,500 whereas resistance is at Rs 40,950-41,100. Sideway to positive movement is expected for the day, according to Motilal Oswal. The broking firm advised its clients to buy on dips targeting resistance at Rs 40,950-41,100.

The brokerage firm said spot gold has key support at $1,560 whereas resistance is at $1,600.

At 12:59 pm (GMT), spot gold was up $5.57 at $1,579.51 an ounce in London trading.
Sandeep Sinha
first published: Jan 31, 2020 08:48 pm

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