Price of gold in the Indian futures market opened higher and remained moderately up in range-bound trading on October 12. US bond yields remained higher, above 1.61, on the back of expectations that bond tapering by the US is likely in November.
A fall in the US dollar index supported precious metals. MCX gold December futures traded at Rs 47,076 per 10 grams, down 0.19 percent, after hitting an intraday high of Rs 47,167 and a low of Rs 47,036, at 11:04 hours IST.
MCX silver December futures declined marginally by 0.08 percent to Rs 61,790 per kg. The commodity touched a day's high of Rs 61,838 and low of Rs 61,579 after opening higher at Rs 61,738.
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“Gold may remain in a narrow range between Rs. 46,850 and Rs. 47,200, with a bias towards the buying side,” said Ravi Singh, vice president and head of Research, Shareindia.
Singh suggests a buying zone above Rs. 47,100 for the target of Rs. 47,350; the sell zone is below Rs. 46,850 for the target of Rs. 46,550.
December’s gold contract closed up yesterday by 0.03% at Rs 47,051 for 10 grams. The December silver contract closed at Rs 61,744 a kilogram, 0.09% down. December gold futures hit a low of Rs. 46,864 and a high of Rs. 47,188 yesterday. Silver traded at a low of Rs. 61,395 and a high of Rs. 62,215.
In the international markets, gold and silver prices settled on a slightly weak note. December’s gold futures contract settled at $1,755.70 per troy ounce, down by 0.09 percent, and the December silver futures contract at $22.66 per troy ounce, down by 0.07 percent.
US inflation data, gold’s safe haven appeal
"Gold and silver gave up earlier gains of the session on Monday after the dollar index showed strength and benchmark 10-year bond yields in the United States crossed 1.60% levels. However, WTI (West Texas Intermediate} crude oil prices hit fresh seven year highs on Monday and supported precious metal prices," said Manoj Kumar Jain of Prithvifinmart Commodity Research.
Jain added that the market is waiting for fresh fundamentals to emerge for further moves and this week’s US inflation data can set the directions on the prices of precious metals.
"Gold witnessed a brief rally on Friday in reaction to US non-farm payrolls data but has retreated to trade in a narrow range near $1,750/oz level. Weighing on gold is firmness in US dollar index amid higher bond yields, monetary tightening expectations and safe haven buying," said Ravindra Rao, vice president and head of commodity research at Kotak Securities.
Rao expects gold to trade in a range as monetary tightening expectations in the US may be countered by inflation and growth worries. Buying is expected to emerge at lower levels as headwinds to the global economy may burnish its safe haven appeal, he added.
In the international markets, Jain expects both precious metals to show some strength this week; gold prices could test $1,784 per troy ounce and silver could test $23.20 per troy ounce levels again after a swift recovery in the base metal prices last week.
"Gold is having support at $1,748-1,734 per troy ounce and resistance at $1,764-1,778 per troy ounce; silver is having support at $22.44-22.20 per troy ounce and resistance at $22.88-23.10 per troy ounce." Jain added.