Gold prices tank to Rs 49,140 per 10 gm on rising bond yields; silver crashes by Rs 1,368 a kg

The broader trend on COMEX could be in the range of $1,845- 1,880 and on domestic front prices could hover in the range of Rs 49,150- 49,530.

Mumbai / January 22, 2021 / 06:52 PM IST

Gold prices fell sharply by Rs 519 to Rs 49,140 per 10 gram in the Mumbai retail market on rupee appreciation and weak global cues. The yellow metal dropped owing to the rise in US treasury yields and a decrease in US weekly jobless claims.

The precious metal prices had declined Rs 187, or 0.38 percent, for the week in the domestic market. The premium charged by a dealer over official domestic price flipped into a discount for first time in 2021 to $0.25 per troy ounce against a premium of $0.5 last week.

The rate of 10 gram 22-carat gold in Mumbai was Rs 45,012 plus 3 percent GST, while 24-carat 10 gram was Rs 49,140 plus GST. The 18-carat gold quoted at Rs 36,855 plus GST in the retail market.

"We are seeing good demand for gold jewellery and rising gold prices have prompted a surge in wedding jewellery booking," Mumbai Jewellers Association Vice President Kumar Jain told Moneycontrol.

He expects the retail yellow metal price to go up from Rs 52,000/10 gm to Rs 60,000 by around March-end to April first week.

Close

According to Kumar, the jewellery industry needs a lot of things from the government, which were mentioned in the last Budget. The industry has already approached the NITI Aayog over these issues. "We have submitted a letter to Finance Minister Nirmala Sitharaman to reduce the import duty to 4-6 percent from 12.5 percent as it will bring down gold smuggling in the country," he noted.

He also said the Industry wants to extend the PAN card limit for buying gold jewellery to Rs 10 lakh from the current Rs 2 lakh as most of the gold buyers are housewives who buy ornaments from their savings and many of them don’t have a PAN card. The Rs 2 lakh limit gets exhausted after buying just 30 gm of gold.

The US dollar traded slightly lower at 90.14, or 0.02 percent, against a basket of six currencies.

Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, remained unchanged for the second day at 1,174.12 tonnes.

Spot gold slumped by $19.19 to $1,851.09 an ounce at 1204 GMT in London trading.

MCX Bulldesk was down 163 points, or 1.05 percent, at 15,288 at 15:34. The index tracks the real-time performance of MCX Gold and MCX Silver futures.

Navneet Damani, Vice President, Motilal Oswal, said, “Gold prices continue to trade in a range as positive economic data, vaccine update and rising US yields gained although it was aided by a weaker dollar and further stimulus bet. Increase in coronavirus numbers and lockdown measures announced by various economies is supporting the prices at lower levels.”

The broader trend on COMEX could be in the range of $1,845-1,880 and on domestic front prices could hover in the range of Rs 49,150-49,530.

The gold/silver ratio currently stands at 74.68 to 1, which means the number of silver ounces required to buy one ounce of gold.

Silver prices tanked Rs 1,368 to Rs 65,792 per kg from its closing on January 21.

In the futures market, the gold rate touched an intraday high of Rs 49,399 and an intraday low of Rs 48,825 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 dipped Rs 444, or 0.90 percent, at Rs 49,004 per 10 gram in evening trade on a business turnover of 5,477 lots. The same for April slipped Rs 430, or 0.87 percent, at Rs 49,166 on a business turnover of 10,546 lots.

The value of the February and April’s contracts traded so far is Rs 2,890.58 crore and Rs 330.45 crore, respectively.

Similarly, Gold Mini contract for February edged lower Rs 447, or 0.90 percent at Rs 48,971 on a business turnover of 14,244 lots.

Trading Strategy

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

Technically, International Gold is trading with negative bias since morning where it bounced back from the resistance of $1,873-1,878 levels in the previous session. Bearish sentiments dominated the morning session and the same continues for the upcoming session as well. On the domestic front, MCX Gold February is trading on a negative note. The support of Rs 48,800-48,600 could be tested in the upcoming session whereas resistance is at Rs 49,500-49,800 levels.

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Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Sandeep Sinha
first published: Jan 22, 2021 06:50 pm

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