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Gold prices decline to Rs 47,724/10 gm on rupee depreciation, ETF outflow; silver drops by Rs 567 a kg

The gold/silver ratio currently stands at 71.24 to 1, which means 71.24 ounces of silver is required to buy an ounce of gold.

Mumbai / July 27, 2021 / 07:09 PM IST

Gold prices fell by Rs 225 to Rs 47,724 per 10 gram in the Mumbai retail market amid subdued global trend, ETF outflow and rupee weakness. The yellow metal traded in a narrow band as investors turned cautious ahead of Fed policy meet outcome and its stance on inflation.

The price of 10 gram, 22-carat gold in Mumbai was Rs 43,715 plus 3 percent GST, while 24-carat 10 gram stood at Rs 47,724 plus GST. The 18-carat gold is quoted at Rs 35,793 plus GST in the retail market.

The Federal Open Market Committee may not make policy changes for July, but more details could likely emerge on the tapering discussions that started in June. 

Apart from Fed meet, investors will also get a first look at 2nd quarter US GDP which is expected to show the peak of post-pandemic recovery. 

Expectations have been trimmed back in recent weeks, but growth is still expected to be strong at 8.6 percent annualised.

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The US dollar traded lower at 92.54, down 0.11 percent against a basket of six rival currencies.

Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell by 1.7 tonnes to 1,025.64 tonnes, the lowest since May 3. The ETF has a market value of $59.34 billion.

Spot gold jumped by $6.74 to $1,804.37 an ounce at 12:48 GMT in London trading.

MCX Bulldesk climbed by 62 points or 0.43 percent, at 14,585 at 17:31. The index tracks the real-time performance of MCX Gold and MCX Silver futures.

“Gold prices were steady, pinned below the key $1,800 level, as investors turned cautious ahead of this week’s US Federal Reserve meeting outcome for clues on when the central bank might rein in its easy monetary policies. The dollar index was steady and hovered around its recent peaks; on other hand U.S. yields fell to record lows”, said Navneet Damani, VP – Commodities Research at Motilal Oswal Financial Services.

“Market is witnessing positive prospects for the global economic recovery, although, concerns regarding new variants of the coronavirus posing a big risk to that outlook, are also increasing. Net gold imports of gold into the world’s biggest bullion consumer China via Hong Kong jumped nearly 42% last month after a slump in May. In this busy week, along with FOMC policy meet, investors will also get a first look at a Q2 US GDP data”, he said. 

The broader range on COMEX could be between $1789- $1813 and on the domestic front prices, could hover in the range of Rs 47,300- Rs 47,920. 

“COMEX gold trades marginally lower near $1795/oz. Gold is pressurized by continued strength in the US equity market, uncertainty about Fed’s monetary policy and continuing ETF outflows. However, supporting prices are rising virus cases, disappointing economic data, concerns about Chinese economy and increased US-China tensions and a jump in Chinese imports. Gold may witness choppy trade amid positioning ahead of Fed decision; however, global growth worries and virus concerns may keep price near $1800/oz”, said Ravindra Rao, CMT, EPAT-Quantinsti, Head - Commodity Research at Kotak Securities Ltd.

The gold/silver ratio currently stands at 71.24 to 1, which means 71.24 ounces of silver is required to buy an ounce of gold.

Silver prices dropped by Rs 567 to Rs 66,988 per kg against its closing price on July 26.

In the futures market, the gold rate touched an intraday high of Rs 47,642 and an intraday low of Rs 47,367 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 137, or 0.29 percent, to Rs 47,598 per 10 gram in evening trade on a business turnover of 4,502 lots. The same for October jumped Rs 140, or 0.30 percent, to Rs 47,760 on a business turnover of 10,984 lots.

The value of August and October’s contracts traded so far is Rs 2,162.43 crore and Rs 732.85 crore, respectively.

Similarly, Gold Mini contract for August edged higher Rs 87, or 0.18 percent at Rs 47,542 on a business turnover of 10,163 lots.

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Tapan Patel- Senior Analyst (Commodities), HDFC Securities

Overall gold prices traded under pressure trading below $1800 as traders and investors are being cautious ahead of US FOMC meeting. Gold prices fell to the lowest levels in three weeks on Fed tapering expectations. The recovery in dollar index also kept upside limited for the day.

We expect gold prices to trade sideways to lower with COMEX spot gold resistance at $1,810 and support at $1,790 per ounce. MCX Gold August support lies at Rs 47,200 and resistance at Rs 47,700 per 10 gram.

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

Technically, International Gold is trading with a negative bias near $1,800 levels and are sustaining above support of $1,798-$1,790 levels. On the domestic front, MCX August gold is trading with marginal sideways and positive bias. We may witness bearish momentum during the evening session and the price may trade near Rs 47,300.

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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

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