Gold prices continued to fall for the third day by Rs 424 to Rs 48,578 per 10 gram at Mumbai retail market tracking sharp selloff yesterday in the global market on upbeat US economic data and a firm dollar. The yellow metal ended the week in red with a loss of Rs 76 or 0.16 percent in the domestic market.
The rate of 10 gram 22-carat gold in Mumbai was Rs 44,497 plus 3 percent GST, while 24-carat 10 gram was Rs 48,578 plus GST. The 18-carat gold quoted at Rs 36,434 plus GST in the retail market.
A measure of US services industry activity increased to a record high in May.
Market participants will keep an eye on U.S. jobs data later today for further cues on economic recovery and near-term Federal Reserve policy action.
“Gold tanked to near two-week lows and looked set for their worst week in three months after robust US economic data boosted the dollar and bond yields. Further pain came in as the Philadelphia Fed President Patrick Harker said that it may be time for Federal Reserve policymakers to start thinking about the best way to slow the pace of its asset purchases. The dollar index rose to a three-week high against its rivals, up by approx. 0.66% and closed at 90.5 in the previous session,” Jigar Trivedi, Research Analyst- Commodities Fundamental, Anand Rathi Shares & Stock Brokers.
The US dollar marginally eased to 90.43, down 0.01 percent against a basket of six rival currencies.
Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund remained unchanged at 1,041.75 tonnes. The ETF has a market value of $62.49 billion.
Spot gold modestly up by $1.35 to $1,872.13 an ounce at 12:14 GMT in London trading.
MCX Bulldesk decreased 8 points or 0.05 percent, at 15,058 at 17:46. The index tracks the real-time performance of MCX Gold and MCX Silver futures.
“Gold prices slipped on positive economic data and the dollar index rose to a three-week high against its rivals; whereas the U.S. 10-year yield rose to 1.63%; hence weighing on the safe-haven metal. President Biden has offered to scrap his proposed corporate tax hike to win Republican backing of the infrastructure plan. On the data front, after a positive manufacturing PMI data we witnessed U.S. services industry activity increasing to a record high in May”, said Navneet Damani, VP – Commodities Research, Motilal Oswal Financial Services.
“The weekly jobless claims were recorded at pre-pandemic levels dropping below 400,000 last week. And US private employers stepped up hiring in May, spurred by robust demand amid a rapidly reopening economy”, he added.
The broader range on COMEX could be between $1,860- 1,885 and on the domestic front prices, could hover in the range of Rs 48,350- 48,850.
“COMEX gold trades modestly lower near $1870/oz. Gold has fallen sharply as upbeat US economic data has pushed the US dollar index and bond yields higher while adding to debate that Fed may tighten monetary policy. US equity markets have also stabilized on President Biden’s tax proposal. Gold's sharp up move in last few weeks has made it vulnerable to profit taking which may extend further if US dollar strengthens further”, said Ravindra Rao, CMT, EPAT, VP-Head Commodity Research at Kotak Securities.
The gold/silver ratio currently stands at 69.23 to 1, which means 69.23 ounces of silver is required to buy an ounce of gold.
Silver prices tumbled by Rs 1,073 to Rs 70,167 per kg against its closing price on June 3.
In the futures market, the gold rate touched an intraday high of Rs 48,715 and an intraday low of Rs 48,454 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 gained Rs 23, or 0.05 percent, to Rs 48,700 per 10 gram in evening trade on a business turnover of 12,058 lots. The same for October fell Rs 69, or 0.14 percent, to Rs 48,918 on a business turnover of 1,935 lots.
The value of August and October’s contracts traded so far is Rs 1,512.04 crore and Rs 136.52 crore, respectively.
Similarly, Gold Mini contract for July jumped by Rs 24, or 0.05 percent at Rs 48,493 on a business turnover of 15,460 lots.
Trading Strategy
Tapan Patel, Senior Analyst (Commodities), HDFC Securities
Gold prices witnessed selling from five-month highs traded below $1900 as investors weighed FED comments digesting weak Chinese data. The US FED officials said to scale back bond buying slowly when the economy has made substantial progress. The traders and investors will wait for today's US ADP payroll data in the evening session.
We expect gold prices to trade sideways to down for the day with COMEX gold support at $1880 and resistance at $1910 per ounce. MCX Gold August support lies at Rs 48,950 and resistance at Rs 49,600 per 10 gram.
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