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Gold price rises on persistent weakness in rupee, ahead of Fed rate decision; silver slips

Gold has already corrected sharply in anticipation of Fed's hawkish stance so we may see range bound and choppy trade ahead of the decision.

Mumbai / June 15, 2021 / 06:29 PM IST

Gold prices soared by Rs 253 to Rs 48,598 per 10 gram at Mumbai retail market on continued weakness in the rupee amid lacklustre global trend. The yellow metal was pressured by the firm dollar as a safe haven ahead of the US Federal Reserve monetary policy outcome tomorrow.

The rate of 10 gram 22-carat gold in Mumbai was Rs 44,516 plus 3 percent GST, while 24-carat 10 gram was Rs 48,598 plus GST. The 18-carat gold quoted at Rs 36,449 plus GST in the retail market.

The US dollar rose to 90.57, up 0.09 percent against a basket of six rival currencies. The strength in the greenback makes bullion metal expensive for other currency holders.

Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund were unchanged for the second day at 1,044.61 tonnes. The ETF has a market value of $62.64 billion.

Spot gold marginally eased $0.73 to $1,865.47 an ounce at 12:24 GMT in London trading. The price is trading near a strong support zone of $1,850-1,870 and a break below the same will confirm further downside in the prices.

Close

MCX Bulldesk marginally up by 4 points or 0.03 percent, at 15,106 at 17:58. The index tracks the real-time performance of MCX Gold and MCX Silver futures.

“COMEX gold trades flat near $1864/oz. Gold had come under pressure amid a recovery in US bond yields as market players position for Fed decision. ETF investors also moved to the sidelines. However, supporting price is choppy equities, rising inflation concerns and persisting virus concerns. Gold has already corrected sharply in anticipation of Fed's hawkish stance so we may see range bound and choppy trade ahead of the decision”, said Ravindra Rao, CMT, EPAT, VP- Head Commodity Research at Kotak Securities.

The gold/silver ratio currently stands at 68.25 to 1, which means 68.25 ounces of silver is required to buy an ounce of gold.

Silver prices fell by Rs 138 to Rs 71,202 per kg against its closing price on June 14.

In the futures market, the gold rate touched an intraday high of Rs 48,700 and an intraday low of Rs 48,472 on the Multi-Commodity Exchange (MCX). For the August series, the yellow metal touched a low of Rs 44,501 and a high of Rs 49,721.

Gold futures for August delivery jumped Rs 75, or 0.15 percent, to Rs 48,598 per 10 gram in evening trade on a business turnover of 10,986 lots. The same for October soared by Rs 89, or 0.18 percent, to Rs 48,918 on a business turnover of 2,993 lots.

The value of August and October’s contracts traded so far is Rs 1,617.87 crore and Rs 157.05 crore, respectively.

Similarly, Gold Mini contract for July jumped Rs 110, or 0.23 percent at Rs 48,428 on a business turnover of 16,632 lots.

Trading Strategy

Tapan Patel- Senior Analyst (Commodities), HDFC Securities

Gold prices fluctuated over FED speculation as the market is waiting for a signal from US FED of any tapering or schedule of tapering bond buying program. 

We expect gold prices to trade sideways to up for the day with COMEX gold support at $1850 and resistance at $1880 per ounce. MCX Gold August support lies at Rs. 48100 and resistance at Rs.48800 per 10 gram.

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

International Gold is trading with negative bias below $1,870 levels and may continue to decline and test the major support of $1,850-1,860 levels. On the domestic front, MCX Gold August has been trading with marginal sideways and positive bias since morning. The market declined more than 700 points in the previous session but could not sustain at lower levels and recovered approximately 500 points in the evening session. We may witness the prices trade with bearish momentum in the evening session.
Sandeep Sinha

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