Gold prices rose Rs 877 to Rs 40,092 per 10 gram in the Mumbai bullion on rupee depreciation and safe-haven buying due to geopolitical tensions in the Middle East.
10 gram 22-carat gold in Mumbai was priced at Rs 36,724 plus 3 percent GST, while 24-carat 10 gram was Rs 40,092 plus GST. 18-carat gold quoted at Rs 30,069 plus GST in the retail market.
The precious metal surged after a US airstrike on Friday morning killed Iran Quds Force chief Qassem Soleimani and top Iraqi militia commander Abu Mahdi al-Muhandis on their convoy at Baghdad airport, escalating the already-flared relationship between the US and Iran.
Ravindra Rao, VP- Head Commodity Research at Kotak Securities said, ‘Today’s development will further intensify tensions between US and Iran and spur safe-haven buying in gold. However, market reaction may subside if there is no retaliatory move by Iran or no major exchange of words between Tehran and Washington."
He believes the immediate resistance for gold is near $1,546 per troy ounce. If this level breaches, the price might move close to the September 2019 highs of $1,560 per troy ounce.
High gold prices dented retail demand in India to a three-year low of 831 tonne in 2019, a drop of 12 percent from 944 tonne in 2018.
The gold/silver ratio, that refers to the amount of silver required to buy an ounce of gold was at 84.70 to 1.
Silver prices gained Rs 990 to 47,330 per kg from its closing on January 2.
In the futures market, gold rate touched an intraday high of Rs 40,143 and an intraday low of Rs 39,500 on MCX. For the February series, the yellow metal touched a low of Rs 36,098 and a high of Rs 40,806.
Gold futures for delivery in February rose Rs 785, or 2 percent on the MCX trading at Rs 40,062 per 10 gram in evening trade in a business turnover of 16,087 lots. Gold contracts for April delivery gained Rs 769, or 1.95 percent, at Rs 40,199 per 10 gram in a business turnover of 7,617 lots.
The value of the February contract traded so far is Rs 4,910.87 crore and April contract saw the value of Rs 500.45 crore.
Similarly, Gold Mini contract for February was higher by Rs 749, or 1.91 percent at Rs 39,998 in a business turnover of 14,422 lots.
MCX Gold rose to a four-month high after a US airstrike killed one of Iran’s most powerful generals, ratcheting up tensions in the Middle East.
Rajesh Palviya, Head - Technical & Derivatives Analyst, Axis Securities pointed out that bullion is building on a 2020 rally on a weakening rupee and geopolitical concerns following the US airstrike in Baghdad. MCX gold price has already risen 27 percent last year, the biggest annual advance since 2010 on US-China trade war, he noted.
He expects Comex gold, which is currently trading near 6-year highs, to have a crucial resistance at $1,570 level. Any breakout above this level could drive prices higher to $1,610-$1,630 level, he said.
With breakout above Rs 39,000 on a weekly closing basis, Katke expects MCX gold to scale up toward Rs 40,500-41,000 in coming days, but any dip to Rs 39,700-39,800 could be buying opportunities.
At 12:38 pm (GMT), spot gold was up $20.65 at $1,548.55 an ounce in London trading.Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.