Gold price dropped for the second consecutive day on February 25 by Rs 392 to Rs 46,446 per 10 gram in the Mumbai retail market on the firm equity market and weak global cues. The precious metal was pressured downward by a sharp rise in US Treasury yields and US FDA stating that J&J’s single-shot vaccine offered strong protection against COVID-19.
The rate of 10 gram 22-carat gold in Mumbai was Rs 42,545 plus 3 percent GST, while 24-carat 10 gram was Rs 46,446 plus GST. The 18-carat gold quoted at Rs 34,835 plus GST in the retail market.
Market participants will keep an eye on the data points expected from the US like Durable Goods Order, GDP (Q4) estimate and weekly jobless claims data, scheduled later in the day.
The US 10-year bond yield climbed 4.34 percent to 1.44 percent, the highest since February 23, 2020. The rise in yield increases the opportunity cost of holding non-yielding bullion.
The US dollar trades lower at 89.78, or 0.43 percent against a basket of six currencies, the lowest since January 6.
Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell by 4.1 tonnes to 1,106.36 tonnes, on continued ETF outflow.
Spot gold declined by $19.32 to $1,785.48 an ounce at 12:09 GMT in London trading.
MCX Bulldesk eased 8 points or 0.05 percent, at 14,880 at 17:43. The index tracks the real-time performance of MCX Gold and MCX Silver futures.
Navneet Damani, Vice President, Motilal Oswal Financial Services (MOFSL) said, “Gold prices traded as volatility in US Treasury yields and dollar and Federal Reserve Chairman Jerome Powell's dovish comments kept market participants on the edge. Benchmark US Treasury yields hovered near a one-year peak hit in the previous session. The dollar, on the other hand, languished near three-year lows against its major crosses. Governor Powell's statement’s continue to add weight to the US central bank's promise to get the economy back to full employment, and to not worry about inflation unless prices begin rising in a persistent and troubling way."
"The broader range on COMEX could be between $1,765- $1,825 and on the domestic front, prices could hover in the range of Rs 46,100- Rs 46,950," Damani added.
“COMEX gold trades lower near $1788/oz. Gold is choppy as support from Fed’s loose monetary policy stance and hopes of additional US stimulus measures is countered by higher bond yields, improving virus situation and continuing ETF outflows. Gold may remain directionless amid mixed cues; however, Fed's loose monetary policy stance may continue to support”, Ravindra Rao, VP- Head Commodity Research at Kotak Securities.
The gold/silver ratio currently stands at 66.13 to 1, which means the number of silver ounces required to buy one ounce of gold.
Silver prices climbed by Rs 999 to Rs 70,225 per kg from its closing on February 24.
In the futures market, the gold rate touched an intraday high of Rs 46,655 and an intraday low of Rs 46,252 on the Multi-Commodity Exchange (MCX). For the April series, the yellow metal touched a low of Rs 45,861 and a high of Rs 51,931.
Gold futures for April delivery fell Rs 172, or 0.37 percent, to Rs 46,350 per 10 gram in evening trade on a business turnover of 13,517 lots. The same for June declined Rs 197, or 0.42 percent, at Rs 46,480 on a business turnover of 2,716 lots.
The value of the April and June’s contracts traded so far is Rs 2,992.36 crore and Rs 141.11 crore, respectively.
Similarly, Gold Mini contract for March edged lower by Rs 162, or 0.35 percent to Rs 46,360 on a business turnover of 13,518 lots.
Trading Strategy
Tapan Patel, Senior Analyst (Commodities), HDFC Securities
Gold prices traded under pressure with a rise in US bond yields despite a weaker dollar on strong equity indices. The strong equity indices on economic growth optimism pushed bullion prices down for the day.
We expect gold prices to trade sideways to down with COMEX spot gold support lies at $1,780 and resistance at $1,810. MCX Gold April support lies at Rs 46,100 and resistance lies at Rs 46,600.
Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited
International Gold is trading with marginal negative bias below $1,800 levels. We may expect bears to dominate the evening session and test $1,780 levels. MCX April gold has been trading in a marginal sideways and negative trend. Bearish momentum is likely to persist below Rs 46,700 levels whereas support is at Rs 46,350-46,250 levels.
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