Gold prices declined by 1.57 percent during the week to settle at Rs 46,785 per 10 gram, pressured by sharp rupee appreciation. The precious metal was weighed down by a rebound in the US dollar index after upbeat data on personal income, spending and manufacturing in the US.
The yellow metal fell in four out of five trading sessions on the MCX and ended the week with a loss of Rs 747. COMEX gold, on the other hand, eased $8.4 or 0.47 percent during the same period.
The bullion metal has been trading lower than 5, 20, 100 and 200 days' moving averages but higher than the 50-day moving averages on the daily chart. The momentum indicator Relative Strength Index (RSI) is at 51.70, indicating neutral movement in prices.
The global vaccine rollouts have increased consumer confidence and led to stronger-than-expected economic recovery which has capped upside in gold price cornering inflation concerns.
The spot rupee rallied by 1.25 percent against the dollar for the week to close at 74.09.
The dollar index rose above 91-mark, gaining 0.46 percent while US 10-year treasury yields rallied to 1.62 percent during the week after recovering from recent lows of 1.55 percent.
The CFTC data showed that money managers decreased their net long positions by 6,146 lots in the last week.
“Gold prices traded lower during the week as prices struggled to break key resistance levels. Gold prices traded weak with dollar recovery and rise in US bond yields. The strong US GDP numbers pressured gold prices to trade weak despite expanding FED balance sheet and another stimulus from Biden administration”, said Tapan Patel, Senior Analyst (Commodities), HDFC Securities.
Patel expects gold prices to trade sideways to lower in the coming week with COMEX spot gold resistance at $1,800 per ounce and support at $1,750 per ounce. At MCX, Gold June prices have near-term resistance at Rs 47,500 per 10 grams and support at Rs 46,200 per 10 gram.
In the retail market, the bullion metal closed at Rs 46,791 per 10 gram on April 30 on firm Treasury yields, dollar and subdued global trend. The yellow metal dropped by Rs 1,015 or 2.12 percent during the week in the domestic market.
The rate of 10 gram 22-carat gold in Mumbai was Rs 42,861 plus 3 percent GST, while 24-carat 10 gram was Rs 46,791 plus GST. The 18-carat gold quoted at Rs 35,093 plus GST in the retail market.
The spot gold/silver ratio currently stands at 68.25 to 1, indicating that gold has outperformed silver.
Gold ETF holdings continued outflow as holdings at SPDR Gold Shares declined to 1,017 tonnes from the previous week’s 1,020 tonnes.
MCX Bulldesk eased 4 points or 0.03 percent to close at 14,610. The index tracks the real-time performance of MCX Gold and MCX Silver futures.
Spot gold settled with a loss of $3.15 at $1,768.97 an ounce in London trading.
In the futures market, the gold rate touched an intraday high of Rs 46,819 and an intraday low of Rs 46,605 on the Multi-Commodity Exchange (MCX). For the June series, the yellow metal touched a low of Rs 44,108 and a high of Rs 51,924.
Gold futures for June delivery rose by Rs 59, or 0.13 percent, to settle at Rs 46,785 per 10 gram with a business turnover of 10,418 lots. The same for August gained by Rs 45, or 0.10 percent, to Rs 47,080 on a business turnover of 3,408 lots.
The value of June and August’s contracts traded on April 30 was Rs 2,954.88 crore and Rs 120.86 crore, respectively.
Similarly, Gold Mini contract for May edged up by Rs 95, or 0.20 percent at Rs 46,495 on a business turnover of 1,968 lots.
Next Week Strategy
Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited
Strategy: For the upcoming sessions, MCX Gold future likely to continue its bullish momentum towards a psychological level of Rs 49,000. Traders are likely to go for a buy-on-dips opportunity around the level of Rs 46,500-46,600, keeping a stop loss at Rs 45,800.Rationale: MCX Gold futures declined in the last two consecutive sessions and the price is trading near 100-day SMA on the daily chart. If the 10-year yield calms down significantly, then it is likely that the gold markets will start to strengthen again from this level. If we clear Rs 48,400 levels, then we may see the next move towards Rs 49,700.