Gold price gains for second straight day to Rs 48,045/10 gm, silver jumps Rs 1,524 a kg

Gold price surged for the second straight day on February 9. The yellow metal gained Rs 533 to Rs 48,045 per 10 gram in the Mumbai retail market on weaker dollar and hopes of large US stimulus package. The yellow metal rose as 10-year treasury fall and equity market rally took a breather.

The rate of 10 gram 22-carat gold in Mumbai was Rs 44,009 plus 3 percent GST, while 24-carat 10 gram was Rs 48,045 plus GST. The 18-carat gold quoted at Rs 36,034 plus GST in the retail market.

“With the much-awaited Valentine’s Day approaching and the wedding dates still around, we are witnessing a rise in footfalls at stores and visits to our e-commerce sites. The drop in gold price due to the duty cut is also one of the several reasons that are driving the sales. Demand for diamond jewellery has also increased manifold this year. Customers are buying diamond rings, pendants, necklace and earrings, diamond embedded gold jewellery, rose gold and platinum jewellery. We have also witnessed an increase in sales figures for wedding jewellery,” said Suvankar Sen, CEO, Senco Gold and Diamonds.

The US dollar traded lower at 90.56, or 0.42 percent against a basket of six currencies, down 1 percent from Thursday’s two- month high.

Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund decreased by 4.1 tonnes to 1,152.24 tonnes, the lowest since June 2020.

Market participants will focus on the inflation number from US and IIP data from major economies scheduled later this week.

Spot gold jumped by $13.42 to $1,844.07 an ounce at 1158 GMT in London trading.

MCX Bulldesk was up 81 points, or 0.53 percent, at 15,294 at 17:29. The index tracks the real-time performance of MCX Gold and MCX Silver futures.

Navneet Damani, Vice President, Motilal Oswal said, “Gold’s edged higher, rallying to near mid-$1,800 levels on the Biden administration’s move to push a $1.9 trillion coronavirus relief plan through Congress — with or without bipartisan support. With investors remaining focused the Covid relief plan, US Treasury Secretary Janet Yellen also said that $1.9 trillion stimulus plan can help the country get back to full employment by next year. US 10Y did mark an 11 month high although some retracement was seen from the highs later in yesterday's session. The US reported a 25% drop in new cases of COVID-19 last week, biggest fall since the pandemic started, while Britain recorded the smallest number of new COVID-19 cases for two months capping some gains for the bullion.” 

The broader range on COMEX could be between $1825- 1870 and on the domestic front, prices could hover in the range of Rs 47,750- 48,350.

“COMEX gold traded higher near $1844/oz supported by a correction in the US dollar index from recent highs and increased expectations of US stimulus. However, weighing on price is ETF outflows and higher US bond yields and improved risk sentiment. Gold has recovered from recent lows however a sustained rise may come only if US dollar corrects sharply”, said Ravindra Rao, VP- Head Commodity Research at Kotak Securities.

The gold/silver ratio currently stands at 68.68 to 1, which means the number of silver ounces required to buy one ounce of gold.

Silver prices climbed Rs 1,524 to Rs 69,948 per kg from its closing on February 8. 

In the futures market, the gold rate touched an intraday high of Rs 48,235 and an intraday low of Rs 47,951 on the Multi-Commodity Exchange (MCX). For the April series, the yellow metal touched a low of Rs 46,611 and a high of Rs 51,931.

Gold futures for April delivery soared Rs 271, or 0.57 percent, at Rs 48,110 per 10 gram in evening trade on a business turnover of 12,715 lots. The same for June gained Rs 255, or 0.53 percent, at Rs 48,200 on a business turnover of 934 lots.

The value of the April and June’s contracts traded so far is Rs 2,153.51 crore and Rs 20.23 crore, respectively.

Similarly, Gold Mini contract for March edged higher Rs 234, or 0.49 percent at Rs 47,960 on a business turnover of 17,549 lots.

Trading Strategy

Tapan Patel, Senior Analyst (Commodities), HDFC Securities

Gold prices continued upside on US stimulus hopes after US democrats released the first draft of key legislation including Biden’s covid relief bill. The yellow metal also got support from a weaker dollar index which was trading below 91 marks for the day.

We expect gold prices to trade sideways to up with COMEX spot gold support lies at $1,820 and resistance at $1,860. MCX Gold April support lies at Rs 47,800 and resistance lies at Rs 48,200.

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