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Gold price eases ahead of Fed's rate decision; silver rises Rs 191 a kg

Gold has already corrected in expectation that Fed may hint toward monetary tightening and further movement may come from actual stance of the central bank, Rao added.

Mumbai / June 16, 2021 / 06:19 PM IST

Gold prices dropped by Rs 201 to Rs 48,397 per 10 gram at Mumbai retail market on the subdued global trend. The yellow metal traded under pressure as investors wait for FOMC monetary policy decision later in the day.

The rate of 10 gram 22-carat gold in Mumbai was Rs 44,332 plus 3 percent GST, while 24-carat 10 gram was Rs 48,397 plus GST. The 18-carat gold quoted at Rs 36,298 plus GST in the retail market.

Market participants will focus on the FOMC policy meet and comments from Fed officials and the Governor regarding any change in policy or liquidity measures.

The US dollar modestly lower to 90.47, down 0.03 percent against a basket of six rival currencies.

Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund were unchanged for the third day at 1,044.61 tonnes. The ETF has a market value of $62.62 billion.

Close

Spot gold slightly fell $3.78 to $1,855.10 an ounce at 12:10 GMT in London trading.

MCX Bulldesk rose by 14 points or 0.09 percent, at 15,059 at 17:42. The index tracks the real-time performance of MCX Gold and MCX Silver futures.

“Gold prices trade steady after a fall witnessed in yesterday's session, due to a stronger dollar and an uptick in U.S. yields as investors look forward to the outcome of the U.S. Federal Reserve meeting for hints on tapering of economic support measures. The dollar held steady near a one-month high; whereas U.S. yields breached the 1.5 level in yesterday's session weighing on the safe haven metal. In the mixed set of data from the US yesterday, retail sales were reported below the expectations in May, while producer prices jumped by 6.6% year-over-year during the month, the largest gain since Nov'10. Meanwhile, US-EU resolves 17-year dispute over subsidies to Airbus and Boring after reaching a trade truce, hence weighing on the overall sentiment”, said Navneet Damani, VP – Commodities Research at Motilal Oswal Financial Services.

“COMEX gold trades moderately higher near $1861/oz. Gold has turned range bound as market players’ position for Fed decision. Gold has already corrected in expectation that Fed may hint toward monetary tightening and further movement may come from actual stance of the central bank”, said Ravindra Rao, CMT, EPAT, VP- Head Commodity Research at Kotak Securities.

The gold/silver ratio currently stands at 67.78 to 1, which means 67.78 ounces of silver is required to buy an ounce of gold.

Silver prices jumped by Rs 191 to Rs 71,393 per kg against its closing price on June 15.

In the futures market, the gold rate touched an intraday high of Rs 48,564 and an intraday low of Rs 48,367 on the Multi-Commodity Exchange (MCX). For the August series, the yellow metal touched a low of Rs 44,501 and a high of Rs 49,721.

Gold futures for August delivery gained Rs 31, or 0.06 percent, to Rs 48,455 per 10 gram in evening trade on a business turnover of 10,774 lots. The same for October eased by Rs 8, or 0.02 percent, to Rs 48,760 on a business turnover of 3,060 lots.

The value of August and October’s contracts traded so far is Rs 1,376.85 crore and Rs 78.55 crore, respectively.

Similarly, Gold Mini contract for July edged up Rs 58, or 0.12 percent at Rs 48,288 on a business turnover of 16,696 lots.

Trading Strategy

Tapan Patel- Senior Analyst (Commodities), HDFC Securities

Gold prices traded under pressure as traders and investors are awaiting the outcome of the US FOMC meeting. The speculation of scaling back stimulus has kept bullion prices lower. The FED may signal to start a discussion on any plan to unwind asset purchase program.

We expect gold prices to trade sideways to up for the day with COMEX gold support at $1,850 and resistance at $1,880 per ounce. MCX Gold August support lies at Rs 48,100 and resistance at Rs.48,800 per 10 gram.

Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited

Technically, International gold is trading with negative bias below $1,870 levels and may continue to decline and test the support of $1,850-1,840 levels. On the domestic front, MCX August Gold has been sustaining below 50-SMA and the market declined more than 500 points since the previous week. We may witness bearish momentum in the evening session where Rs 48,300-48,200 levels may be tested.

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Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Sandeep Sinha

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