Gold prices edged lower to Rs 46,610 per 10 gram on April 9 as participants trimmed their position as seen by the open interest. The precious metal was pressured by an uptick in US Treasury yields and the dollar rebounding from two-week low.
The yellow metal rose in four out of five trading sessions on the MCX and ended the week with a gain of Rs 1,826, or 4.08 percent. COMEX gold, on the other hand, soared $16.8 or 0.97 percent during the same period.
The bullion metal has been trading higher than 5, 20 and 50 days' moving averages but lower than the 100 and 200 days' moving averages on the daily chart. The momentum indicator Relative Strength Index (RSI) is at 62.74, indicating bullish momentum in prices.
“Gold is currently in a consolidation phase which is encouraging bargain hunters and long-term investors to step in and take advantage of low prices as gold, driven by the macroeconomic developments outlined above, may soon reverse direction decisively and recover”, said Chirag Mehta - Senior Fund Manager - Alternative Investments, Quantum AMC.
Both Fed Chair Powell and US Treasury Secretary Yellen have shared their optimism about economic growth this year, hurting gold. Nonetheless, prices are still supported as the Federal Reserve has repeatedly assured markets of no change in its accommodative monetary policy stance any time soon, Mehta added.
Association of Mutual Funds in India (Amfi) showed that heightened risk and uncertainty sparked by the COVID-19 pandemic prompted investors to rush to gold as safe-haven as they infused over Rs 6,900 crore in gold exchange-traded funds (ETFs) in 2020-21, more than four times from the previous fiscal.
In the retail market, the bullion metal closed at Rs 46,446 per 10 gram on Friday, marginally up by 0.07 per cent, tracking a sharp plunge in the rupee. The yellow metal rose by Rs 1,527 or 3.40 percent during the week in the domestic market.
The rate for 10 gram 22-carat gold in Mumbai was Rs 42,545 plus 3 percent GST, while 24-carat 10 gram was Rs 46,446 plus GST. The 18-carat gold quoted at Rs 34,835 plus GST in the retail market.
The US dollar index ended modestly firm at 92.18, up 0.12 percent on April 9 against the major cross. The dollar index ended with a loss of 0.85 percent during the week.
The spot gold/silver ratio currently stands at 69.07 to 1 indicating that gold has outperformed silver.
The spot rupee ended 1.84 percent lower against the dollar for the week. Gold ETF holdings continued outflow as holdings at SPDR Gold Shares fell to 1026 tonnes during the week, down from the previous week’s 1033 tonnes.
MCX Bulldesk decreased 77 points or 0.53 percent to close at 14,566. The index tracks the real-time performance of MCX Gold and MCX Silver futures.
Spot gold settled with a loss of $11.68 at $1,743.94 an ounce in London trading. The yellow metal has declined $153.39 or 8.08 percent in 2021.
In the futures market, the gold rate touched an intraday high of Rs 46,887 and an intraday low of Rs 46,314 on the Multi-Commodity Exchange (MCX). For the June series, the yellow metal touched a low of Rs 44,108 and a high of Rs 51,924.
Gold futures for June delivery fell by Rs 228, or 0.49 percent, to settle at Rs 46,610 per 10 gram with a business turnover of 11,834 lots. The same for August declined by Rs 245, or 0.52 percent, to Rs 46,824 on a business turnover of 1,562 lots.
The value of June and August’s contracts traded on April 9 was Rs 4,003.67 crore and Rs 365.97 crore, respectively.
Similarly, Gold Mini contract for May edged lower by Rs 240, or 0.52 percent at Rs 46,336 on a business turnover of 17,380 lots.
Next Week Strategy
Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited
Strategy: The commodity witnessed a decent rally in the last week after taking support of Rs 44600, a good number of buyers are emerging near Rs 44,600; short-term momentum has flipped and is now positive. As the fast stochastic generated a crossover buy signal, for the coming week, trader should play on the long side bat and make a buy position near Rs 46,300 with a stop loss of Rs 45,800 for the target of Rs 47,450.
Rationale: Investors are buying for midterm after decline in bond yield prices in US and weak dollar index. The price is trading above 50-SMA which is placed at Rs 45,900. The medium-term momentum is looking positive as the MACD index generated a crossover buy signal.
Events to watch out
CPI, IIP India – April 12
US CPI – April 13
US retail sales, manufacturing production – April 15
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