Gold price rises by Rs 126 to Rs 47,407/10 gm as dollar slides; silver gains by Rs 290 a kg

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Gold prices jumped by Rs 126 to Rs 47,407 per 10 gram in the Mumbai retail market on dollar weakness and muted global cues. The yellow metal traded in a narrow price band amid lack of fresh triggers in the global market.

The rate of 10 gram 22-carat gold in Mumbai was Rs 43,425 plus 3 percent GST, while 24-carat 10 gram was Rs 47,407 plus GST. The 18-carat gold quoted at Rs 35,555 plus GST in the retail market.

The precious metal upside remained capped as US treasury yields raced to their highest levels since the breakout of coronavirus worldwide.

Market participants now await minutes of the Federal Reserve's end-January monetary policy meeting on February 17. Also, any updates regarding the COVID-19 stimulus bill from the Biden administration could trigger the market volatility further.

The US dollar declined to 90.14, or 0.36 percent against a basket of six currencies on reduced safe-haven demand.

Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund remained unchanged for the second day at 1,142.22 tonnes.

Spot gold was marginally down by $0.76 to $1,817.13 an ounce at 1205 GMT in London trading.

MCX Bulldesk edged up 20 points or 0.13 percent, at 15,100 at 17:36. The index tracks the real-time performance of MCX Gold and MCX Silver futures.

Navneet Damani, Vice President, Motilal Oswal said: “Gold price edged higher in the morning session although market participants are still cautious amidst the rising global equities and US yields. Global shares held firm looking to extend their bull run as optimism about the global economic recovery and expectations of low interest rates drive investments into riskier assets. Along with other vaccines, WHO-listed AstraZenca and Oxford University's COVID-19 vaccine for emergency use are widening access to the relatively inexpensive shot in the developing world, putting further pressure on the metal.”

The broader range on COMEX could be between $1,810 and $1,840, and on the domestic front, prices could hover in the range of Rs 47,300- 47,700.

“COMEX gold trades near $1,825/oz as support from weaker US dollar, mixed economic data from major economies and hopes of additional US stimulus are countered by higher bond yields, improvement in virus situation and continuing ETF outflows. Gold may remain choppy unless there are fresh triggers. However, general bias may be on the upside amid weakness in the US dollar,” Ravindra Rao, VP- Head Commodity Research at Kotak Securities.

The gold/silver ratio currently stands at 69.91 to 1, which means the number of silver ounces required to buy one ounce of gold.

Silver prices rose by Rs 290 to Rs 69,804 per kg from its closing on February 15. 

In the futures market, the gold rate touched an intraday high of Rs 47,480 and an intraday low of Rs 47,230 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 gained Rs 56, or 0.12 percent, at Rs 47,297 per 10 gram in evening trade on a business turnover of 12,634 lots. The same for June rose Rs 38, or 0.08 percent, at Rs 47,420 on a business turnover of 1,787 lots.

The value of the April and June’s contracts traded so far is Rs 1,980.45 crore and Rs 39.48 crore, respectively.

Similarly, Gold Mini contract for March edged up Rs 52, or 0.11 percent at Rs 47,170 on a business turnover of 19,130 lots.

Trading Strategy

Tapan Patel, Senior Analyst (Commodities), HDFC Securities

Gold prices were supported by a weaker dollar. The dollar index was down by 0.17 percent in the noon trade, boosting buying in the yellow metal. The traders and investors are awaiting fresh triggers to get bullish momentum in gold prices.

We expect gold prices to trade sideways to up with COMEX spot gold support lies at $1,800 and resistance at $1,840. MCX Gold April support lies at Rs 47,100 and resistance lies at Rs 47,600.

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