The surprising direct correlation between stocks and gold is likely to continue until investors feel the liquidity crunch is over, according to said Navneet Damani, Vice President, Motilal Oswal.
Gold price declined Rs 616 to Rs 40,719 per 10 gram in the Mumbai bullion market on a stronger dollar. The activity in the bullion market has been subdued with lockdown announced by the state governments to prevent the spread of coronavirus diseases with only online sales taking place.
The rate of 10 gram 22-carat gold in Mumbai was Rs 37,299 plus 3 percent GST, while 24-carat 10 gram was Rs 40,719 plus GST. The 18-carat gold quoted at Rs 30,539 plus GST in the retail market.
“Gold prices edged up in morning session following weakness in the Dollar but has somewhere failed to benefit from risk aversion and remained on the back foot. It touched an eight-month low previous week on liquidation of all asset class to cover margin calls and losses,” said Navneet Damani, Vice President, Motilal Oswal.
The surprising direct correlation between stocks and gold is likely to continue until investors feel the liquidity crunch is over. Gold demand this month from investors is the heaviest since the depths of the global financial crisis in early 2009. Market participants will keep an eye on the US headlines and further global measures to combat the pandemic for immediate direction.
The broader trend on Comex could be $1,480-1,515 and on the domestic front, prices could hover in the range of Rs 39,500-40,700, added Damani.
The gold/silver ratio that refers to the amount of silver required to buy an ounce of gold, stood at 110.49 to 1.
Silver prices fell Rs 290 to Rs 36,850 per kg from its closing on March 20.
In the futures market, the gold rate touched an intraday high of Rs 41,038 and an intraday low of Rs 39,765 on MCX. For the April series, the yellow metal touched a low of Rs 37,530 and a high of Rs 44,961.
Gold futures for delivery in April gained Rs 513, or 1.27 percent on the MCX trading at Rs 40,871 per 10 gram in evening trade in a business turnover of 5,356 lots. Gold contracts for June delivery rose Rs 891, or 2.21 percent, at Rs 41,284 per 10 gram in a business turnover of 13,824 lots.
The value of the April contract traded so far is Rs 3,153.15 crore and June contract saw the value of Rs 923.23 crore.
Similarly, Gold Mini contract for April jumped Rs 445, or 1.1 percent at Rs 40,864 in a business turnover of 4,424 lots.
Gold price is forming support near trend line and price is seen pull back, price is expected to trade positive, according to Axis Securities.
If it sustains above Rs 40,300, the next leg of the positive rally would push price higher towards Rs 40,500-40,600 levels.
The broking firm advised its clients buy April Gold at Rs 40,300 with a stop loss at Rs 40,150 and a target of Rs 40,500.
MCX Gold has intraday resistance at Rs 40,735-40,980 whereas supports are placed at Rs 39,880-39,740 levels, according to Motilal Oswal.
The brokerage firm said spot gold has support at $1,465-1440 whereas resistance is at $1,514-1,525.At 13:37 pm (GMT), spot gold rose $21.63 at $1,520.70 an ounce in London trading.
Time to show-off your poker skills and win Rs.25 lakhs with no investment. Register Now!