Gold prices dip to Rs 47,448 per 10 gram on risk appetite, dollar uptick; silver slips by Rs 977 a kg

Gold prices weakened by Rs 262 to Rs 47,448 per 10 gram in the Mumbai retail market on increased risk appetite, dollar uptick and negative global cues. The yellow metal eased as investors look forward to the Federal Reserve’s direction on asset tapering and interest rate hikes.

The price of 10 gram, 22-carat gold in Mumbai was Rs 43,462 plus 3 percent GST, while 24-carat 10 gram stood at Rs 47,448 plus GST. The 18-carat gold is quoted at Rs 35,586 plus GST in the retail market.

Jigar Trivedi, Research Analyst-Commodities Fundamental, Anand Rathi Shares & Stock Brokers said, “We expect MCX gold October future to weaken during the intraday since the US dollar has appreciated after the US reported improvement in sale of new homes. MCX gold October may fall to Rs 47,400 per 10 gram whereas September silver may slide to Rs 63,100 per kg. The focus will now be on Jerome Powell's speech at the Fed's annual economic symposium at Jackson Hole, Wyoming, on August 27 and whether he gives a timeline on the stimulus withdrawal.”

Investors will keep an eye on the US core durables goods order data; which if reported lower than the expectations it could support the metal prices.

Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell by 2.03 tonnes to 1,004.63 tonnes, the lowest since April 2020. The ETF has a market value of $58.39 billion.

The US dollar index climbed above 93 marks to 93.04, up 0.14 percent against a basket of six rival currencies.

Spot gold dropped by $8.60 to $1,794.37 an ounce at 1202 GMT in London trading.

MCX Bulldesk slides by 61 points or 0.43 percent at 14,256 at 17:36. The index tracks the real-time performance of MCX Gold and MCX Silver futures.

“Gold prices witnessed a lower but steady move amidst a firm dollar, with investors awaiting Federal Reserve Chair Jerome Powell’s speech this week for possible guidance on tapering of the pandemic era stimulus. Although, rising Covid cases did cap some losses for the metal. Dr Fauci said that the US could get COVID-19 under control by early next year if vaccinations ramp up, with the country now averaging 1,000 COVID deaths a day and over 150,000 new cases,” said Navneet Damani, VP – Commodities Research at Motilal Oswal Financial Services.

The broader range on COMEX could be $1780- 1825 and on the domestic front, prices could hover in the range of Rs 47,220- 47,820.

The gold-silver ratio currently stands at 75.94 to 1, which means 75.94 ounces of silver is required to buy an ounce of gold.

Silver prices tumbled by Rs 977 to Rs 62,473 per kg against its closing price on August 24.

In the futures market, the gold rate touched an intraday high of Rs 47,482 and an intraday low of Rs 47,287 on the Multi-Commodity Exchange (MCX). For the October series, the yellow metal touched a low of Rs 45,662 and a high of Rs 50,040. 

Gold futures for October delivery slumped Rs 262, or 0.55 percent, to Rs 47,350 per 10 gram in evening trade on a business turnover of 12,048 lots. The same for December dropped Rs 219, or 0.46 percent, to Rs 47,560 on a business turnover of 2,516 lots.

The value of October and December’s contracts traded so far is Rs 1,574.18 crore and Rs 126.94 crore, respectively.

Similarly, Gold Mini contract for September slipped Rs 249, or 0.52 percent at Rs 47,283 on a business turnover of 8,745 lots.

Trading Strategy

Tapan Patel- Senior Analyst (Commodities), HDFC Securities

Gold prices traded under pressure on dollar recovery ahead of US Jackson Hole meet where the market is expecting fresh cues on FED stance on asset tapering and interest rates change. The strong equity indices may also add pressure to the prices for the day. 

We expect gold prices to trade sideways to down with COMEX spot gold resistance at $1,810 and support at $1,780 per ounce. MCX Gold October support lies at Rs 47,100 and resistance at Rs 47,700 per 10 gram.

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

International gold prices are trading with the negative bias over the level of $1,795/oz, with the support of the US dollar remaining over the resistance level of 93 as the dollar ticked upwards. The FDA gave complete approval of the Pfizer/BioNTech COVID-19 vaccine earlier this week, which also contributed to investors’ heightened risk appetite.

On the domestic front, MCX Gold October is trading sideways to a marginally bearish trend trailing below the resistance of Rs 47,500. The immediate support would be Rs 47,250 and if the price breaks this level, we may expect a downfall towards Rs 47,000.

Follow our full coverage of the coronavirus pandemic here.