Gold price rises for fourth day in a row to Rs 50,108 per 10 gram; silver up by Rs 50 a kg

Gold prices jumped for the fourth straight day by Rs 101 to Rs 50,108 per 10 gram in the Mumbai retail market on subdued global cues and a flat rupee. The precious metal price was supported by the weakness in dollar and expectation of a stimulus package for the US economy.

The bullion metal ended the week with a gain of Rs 1,062 or 2.17 percent for the week.

The rate of 10 gram 22-carat gold in Mumbai was Rs 45,899 plus 3 percent GST, while 24-carat 10 gram was Rs 50,108 plus GST. The 18-carat gold quoted at Rs 37,581 plus GST in the retail market.

The number of Americans filing claims for jobless benefits increased by 23,000 to 885,000 for the week ended December 11 as the resurgence of coronavirus cases threaten the US economic recovery.

The Bank of England kept its stimulus programme unchanged as it awaited the outcome of Britain’s trade deal talks with the European Union.

The US dollar trades firm at 89.84, or up 0.11 percent in the evening session against a basket of currencies.

Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell by 0.2 percent to 1,167.82 tonnes.

Spot gold declined by $1.54 at $1,883.93 an ounce at 1201 GMT in London trading.

MCX Bulldesk has eased 47 points, or 0.30 percent, at 15,675 at 17:32. The index tracks the real-time performance of MCX Gold and MCX Silver futures.

Navneet Damani, Vice President, Motilal Oswal said, “Gold edged higher in the early morning session following weakness in the dollar against its major crosses and on expectation of a stimulus package from the US. The yellow metal was also supported at lower levels after the Federal Reserve pledged to hold rates and support the economy until it recovers. Raising concerns over the US economy’s recovery, the number of Americans filing first-time claims for jobless benefits unexpectedly rose last week as mounting COVID-19 infections battered business operations.”

The broader trend on COMEX could be in the range of $1,860- 1,895 and on the domestic front prices could hover in the range of Rs 49,800- 50,550.

“COMEX gold trades modestly lower near $1,883/oz after yesterday’s gains. Weak US dollar, hopes of fiscal stimulus from the US and the Fed’s accommodative stance has supported the bull case. However, progress on the vaccination front and a pause in ETF inflows are capping the gains. Now that $ 1,880/oz is breached we expect the price to continue to trade higher but the break of $1,910/oz would be crucial for the bulls to keep it higher,” said Ravindra Rao, VP- Head, Commodity Research at Kotak Securities.

The gold/silver ratio currently stands at 75.32 to 1, which means the amount of silver required to buy one ounce of gold.

Silver prices gained Rs 50 to Rs 66,519 per kg from its closing on December 17.

In the futures market, the gold rate touched an intraday high of Rs 50,358 and an intraday low of Rs 50,105 on the Multi-Commodity Exchange (MCX). For the February series, the yellow metal touched a low of Rs 41,560 and a high of Rs 57,100.

Gold futures for February delivery slipped Rs 58, or 0.12 percent, at Rs 50,332 per 10 gram in evening trade on a business turnover of 11,678 lots. The same for April dropped Rs 54, or 0.11 percent, at Rs 50,400 on a business turnover of 1,580 lots.

The value of the February and April’s contracts traded so far is Rs 2,120.59 crore and Rs 78.46 crore, respectively.

Similarly, Gold Mini contract for January edged lower Rs 108, or 0.21 percent at Rs 50,155 on a business turnover of 12,141 lots.

Trading Strategy

Tapan Patel- Senior Analyst (Commodities), HDFC Securities

Gold prices witnessed correction on growing optimism of US stimulus package. However, the fall in the dollar index boosted buying in precious metals after US FOMC meet over more bond buying programme from US FED.

We expect gold prices to trade sideways to up with COMEX gold resistance at $1,890 and support at $1,870. MCX Gold February support lies at Rs 49,800 with resistance at Rs 50,500.

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

Technically, spot gold is sustaining above $1,871 and heading towards 100-DMA at $1,905 levels with support placed at $1,873-1,866 levels. For the evening session, prices may take a correction and test the levels of Rs 50,000-49,100 on the downside.

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