Gold prices drop to Rs 48,273 per 10 gram, gain 0.86% in the week; silver slips

Gold prices declined by Rs 151 to Rs 48,273 per 10 gram in the Mumbai retail market on rupee depreciation and negative global cues. The yellow metal ended the week with a gain of Rs 410 or 0.86 percent in the domestic market.

The price of 10 gram, 22-carat gold in Mumbai was Rs 44,212 plus 3 percent GST, while 24-carat 10 gram stood at Rs 48,273 plus GST. The 18-carat gold is quoted at Rs 36,205 plus GST in the retail market.

The bullion metal dropped as market participants discounted the US Federal Reserve monetary stance and will keep an eye on the US Retail Sales data to be released later in the day.

The US dollar jumped to 92.73, up 0.11 percent against a basket of six rival currencies, surging 0.66 percent this week. The rise in the dollar index makes gold expensive for holders of other currencies.

Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, was unchanged at 1,034.37 tonnes. The ETF has a market value of $60.64 billion.

Spot gold declined by $11.69 to $1,817.82 an ounce at 1203 GMT in London trading.

MCX Bulldesk fell by 66 points or 0.44 percent, at 14,803 at 17:35. The index tracks the real-time performance of MCX Gold and MCX Silver futures.

“Gold prices traded steady and on track for a fourth straight weekly gain, as investors took comfort from Governor Jerome Powell’s stance that the US central bank would continue to support the economy and inflation will be transitory. In the second day of testimony yesterday, Governor Powell gave an assurance that Fed will continue to evaluate the risks that affect the inflation,” said Navneet Damani, VP – Commodities Research at Motilal Oswal Financial Services.

The heat between the US and China is also rising once again. The US is expected to impose sanctions on seven officials in China over Honk Kong. The economy in China grew more slowly than expected in the Q2, weighed down by higher raw material costs and new COVID-19 outbreaks, fanning expectations that policymakers may have to do more to support the recovery. 

The broader range on COMEX could be between $1818 and $1852 and on the domestic front, prices could hover in the range of Rs 48,150-48,750. 

“COMEX gold trades lower near $1820/oz. Gold has slightly corrected after having risen to as high as $1833.1/oz in intraday trade yesterday, the highest level since mid-June. Gold is supported amid weaker US Dollar and softening US 10- year bond yields as uncertainty on Fed’s stance on tapering bond purchases weighs. US Treasury yields have recovered today that has kept gold lower. Although the general bias is on the upside one has to be cautious as any uptick in dollar along with bond yields might pressurise gold,” said Ravindra Rao, CMT, EPAT-Quantinsti, Head - Commodity Research at Kotak Securities Ltd.

The gold/silver ratio currently stands at 70.05 to 1, which means 70.05 ounces of silver is required to buy an ounce of gold.

Silver prices dipped by Rs 321 to Rs 68,912 per kg against its closing price on July 15.

In the futures market, the gold rate touched an intraday high of Rs 48,389 and an intraday low of Rs 48,113 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 slipped Rs 219, or 0.45 percent, to Rs 48,181 per 10 gram in evening trade on a business turnover of 7,549 lots. The same for October fell Rs 206, or 0.42 percent, to Rs 48,469 on a business turnover of 7,511 lots.

The value of August and October’s contracts traded so far is Rs 1,646.12 crore and Rs 347.68 crore, respectively.

Similarly, Gold Mini contract for August edged lower by Rs 168, or 0.35 percent at Rs 48,190 on a business turnover of 13,619 lots.

Trading Strategy

Tapan Patel- Senior Analyst (Commodities), HDFC Securities

We expect gold prices to trade sideways to down for the day with COMEX gold support at $1,810 and resistance at $1,840 per ounce. MCX Gold August support lies at Rs 48,000 and resistance at Rs 48,500 per 10 gram.

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

Technically, International Gold is trading with marginal changes above $1,820 levels after a bullish breakout during the week. We may expect a marginal decline after which a rally could be witnessed. On the domestic front, we may expect the market to test Rs 48,200-48,100 levels during the evening hours after which bulls may dominate.

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