Gold price gains Rs 314 to Rs 40,851 per 10 grams, silver jumps to Rs 47,795 per kg

Gold prices jumped Rs 314 to Rs 40,851 per 10 gram in the Mumbai bullion market as investors took cover in the safe-haven metal after Iran fired rockets at Iraqi airbase that hosts US forces to avenge the killing of General Qassem Soleimani.

The precious metal hit a new lifetime of Rs 41,253 in morning trade but pared some gains later as investors awaited US' reaction.

There is still confusion in the market on what will happen next in the US-Iran matter. The broader trend on Comex could be $1,570-1,615 and on the domestic front, prices could hover in the range of Rs 40,700- 41,150, said Navneet Damani, Vice President, Motilal Oswal.

After the spike, Gold price trimmed a part of its early strong gains to near six-year tops and has now stabilized above the key support level $1557. The bullion market took a solid foot in 2020 driven by the fast-rising tensions in the Middle East region and was further fortified by a sharp fall in the US Treasury bond yields, which further benefitted the non-yielding yellow metal and played its part catalysing the strong bullish move, said Dharmesh Bhatia, Associate Vice President, FX and Commodities, Emirates NBD.

On Tuesday, before the latest upheaval, holdings in bullion-backed ETFs rose to the highest since November. Apart from the US-Iran standoff, traders on Wednesday will further take cues from the release of US ADP report on private-sector employment, which might influence the US dollar price dynamics and produce some short-term opportunities, added Bhatia.

The rate of 10 grams 22-carat gold in Mumbai was Rs 37,420 plus 3 percent GST, while 24-carat 10 gram was Rs 40,851 plus GST. The 18-carat gold quoted at Rs 30,638 plus GST in the retail market.

The gold/silver ratio that refers to the amount of silver required to buy an ounce of gold stood at 85.47 to 1.

Silver prices gained Rs 650 to 47,795 per kg from the closing on January 7.

In the futures market, gold rate touched an intraday high of Rs 41,293 and an intraday low of Rs 40,675 on MCX. For the February series, the yellow metal touched a low of Rs 36,098 and a high of Rs 41,293.

Gold futures for delivery in February rose Rs 70, or 0.17 percent on the MCX trading at Rs 40,733 per 10 gram in evening trade in a business turnover of 13,608 lots. Gold contracts for April delivery gained Rs 75, or 0.18 percent, at Rs 40,942 per 10 gram in a business turnover of 9,795 lots.

The value of the February contract traded so far is Rs 6,930.98 crore and April contract saw the value of Rs 1,093.28 crore.

Similarly, Gold Mini contract for February was up by Rs 72, or 0.18 percent at Rs 40,710 in a business turnover of 10,784 lots.

Axis Securities advised its clients to buy gold at Rs 40,850 with stop loss at Rs 40,700 and target of Rs 41,100.

MCX Gold has support at Rs 40,700-40,420 whereas resistance is at Rs 41,150-41,330. Sideways to positive movement is expected for the day, according to Motilal Oswal. The brokerage firm advised its clients to buy on dip targeting resistance level of Rs 41,150-41,330.

The brokerage firm said spot gold has key support at $1,560 whereas resistance remains at $1,610.

At 12:42 pm (GMT), spot gold was up $5.65 at $1,580.05 an ounce in London trading.