Gold prices slumped by Rs 187 to Rs 48,859 per 10 gram in the Mumbai retail market on a stronger rupee and a rally in the equity market. The precious metal traded lower on the hope of improvement in the global economic outlook as nations rollout COVID vaccine and investors’ appetite for riskier assets.
The rate of 10 gram 22-carat gold in Mumbai was Rs 44,755 plus 3 percent GST, while 24-carat 10 gram was Rs 48,859 plus GST. The 18-carat gold quoted at Rs 36,644 plus GST in the retail market.
The rising coronavirus cases across the globe and renewed lockdown measures in few countries have kept the downside capped for the bullion metal.
The COVID relief bill facing a few more hurdles though some positive news could hit the market this week, which will be important with policy meets of FED, ECB, and BOJ lined up that will keep the volatility high.
According to CFTC data, hedge funds and money managers raised their bullish positions in Comex gold by 19,048 contracts to 126,737 contracts.
The US dollar traded weaker at 90.48, or down 0.49 percent, in the evening session against a basket of currencies.
Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, were unchanged at 1,179.78 tonnes.
Spot gold dropped by $11.93 at $1,827.67 an ounce at 1156 GMT in London trading.
MCX Bulldesk was down 141 points, or 0.93 percent, at 15,093 at 1727 hours. The index tracks the real-time performance of MCX gold and MCX silver futures.
Navneet Damani, Vice President, Motilal Oswal, said, “Gold eased lower as the rollout of coronavirus vaccine in the US lifted risk sentiment, offsetting support from hopes for more US economic stimulus and a weaker dollar." The first shipment of the COVID-19 vaccine began on December 13 after the US regulator approved Pfizer Inc and BioNTech SE's vaccine. Many countries have signed a deal with major pharma companies to roll out vaccine doses in large amounts, he said. As the number of COVID cases increased globally, hopes of vaccine amid this fear increased the overall optimism in the market.
The broader trend on COMEX could be in the $1,820- 1,866 range and on the domestic front, prices could hover in the Rs 48,800- 49,570 range.
Comex gold traded lower near $1,831, weighed down by progress on the vaccine front, continuing ETF outflows and delay in US fiscal stimulus deal, Ravindra Rao, VP-Head Commodity Research, Kotak Securities, said.
Rising virus cases, Brexit uncertainty, US-China tensions and a loose monetary policy stance of major central banks supported the prices. "Gold may witness choppy trade amid mixed cues however general bias may be on the downside unless there is pick up in ETF buying or more clarity on US stimulus," Rao said.
The gold/silver ratio stands at 78.04 to 1, which means the amount of silver required to buy one ounce of gold.
Silver prices rose Rs 368 to Rs 62,600 per kg from its closing on December 11.
In the futures market, the gold rate touched an intraday high of Rs 49,132 and an intraday low of Rs 48,602 on the Multi-Commodity Exchange (MCX). For the February series, the metal touched a low of Rs 41,560 and a high of Rs 57,100.
Gold futures for February delivery slipped Rs 474, or 0.96 percent, at Rs 48,850 per 10 gram in the evening trade on a business turnover of 11,835 lots. The same for April slipped Rs 513, or 1.04 percent, at Rs 48,872 on a business turnover of 1,232 lots.
The value of the February and April contracts traded so far is Rs 4,390.96 crore and Rs 132.55 crore, respectively.
Similarly, Gold Mini contract for January eased Rs 437, or 0.81 percent at Rs 48,869 on a business turnover of 12,528 lots.
Tapan Patel- Senior Analyst (Commodities), HDFC Securities
We expect gold prices to trade sideways to down with Comex gold resistance at $1,850, support at $1,820. MCX Gold December support lies at Rs 48,700 with resistance at Rs 49,300.
Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited
Technically, spot gold is trading below 21-Daily Moving Average, suggesting the bearish momentum for the upcoming session. Gold has support at $1,826-1,816 levels whereas resistance is at $1,845-1,854 levels.
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