Gold prices rose by Rs 316 to Rs 49,327 per 10 gram in the Mumbai retail market on rupee weakness and selloff in equity markets. US President-elect Joe Biden's plan to unveil $1.9 trillion economic stimulus pushed bond yields near 10-month highs further strengthening the US Dollar and boosting the precious metal's appeal as an inflation hedge.
The precious metal prices had declined Rs 1,094 or 2.17 percent for the week in the domestic market.
The rate of 10 gram 22-carat gold in Mumbai was Rs 45,184 plus 3 percent GST, while 24-carat 10 gram was Rs 49,327 plus GST. The 18-carat gold quoted at Rs 36,995 plus GST in the retail market.
The spread of new COVID-19 strain may lead investors to flock to safe-haven assets which may support the bullion prices.
The US Labour Department reported that claims for state unemployment benefits increased by 181,000 to a seasonally adjusted 965,000 for the week ended January 8, the highest since August.
The US dollar trades marginally firm at 90.42, or 0.23 percent against a basket of six currencies.
Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund fell by 10.2 ton to 1,161.00 tonnes, the lowest since June 2020.
Spot gold was marginally up by $2.27 to $1,848.56 an ounce at 1202 GMT in London trading.
MCX Bulldesk was down 91 points, or 0.59 percent, at 15,276 at 17:33. The index tracks the real-time performance of MCX Gold and MCX Silver futures.
Navneet Damani, Vice President, Motilal Oswal said, “Gold traded in a range hovering around the $1,850 levels, it got some support in the yesterday’s session as US President-elect Joe Biden unveiled a massive stimulus plan, while US Fed Governor J Powell's commitment to keeping monetary policy dovish further boosted the metal's appeal."
Biden unveiled a $1.9 trillion stimulus package proposal designed to jump-start the economy and speed up the US response to the coronavirus pandemic. Fed governor in his speech yesterday maintained a dovish tone as, with the US economy still far from its inflation and employment goals it is too early for the Fed to discuss changing its monthly bond purchases.”
The broader trend on COMEX could be in the range of $1,830- 1,900 and on domestic front prices could hover in the range of Rs 48,950- 49,750.
“COMEX gold trades marginally higher near $1855/oz. Gold is choppy amid a directionless US Dollar and equity market. Although it is garnering support from rising virus cases, disappointing US economic data and hopes of higher US stimulus possibility of higher US bond yields, vaccine progress and continuing ETF outflows are limiting the gains. Gold may remain choppy however general bias may be on the upside”, Ravindra Rao, VP- Head Commodity Research at Kotak Securities.
The gold/silver ratio currently stands at 75.40 to 1, which means the number of silver ounces required to buy one ounce of gold.
Silver prices soared Rs 616 to Rs 65,420 per kg from its closing on January 14.
In the futures market, the gold rate touched an intraday high of Rs 49,327 and an intraday low of Rs 49,010 on the Multi-Commodity Exchange (MCX). For the February series, the yellow metal touched a low of Rs 41,560 and a high of Rs 57,100.
Gold futures for February delivery gained Rs 129, or 0.26 percent, at Rs 49,092 per 10 gram in evening trade on a business turnover of 7,147 lots. The same for April rose Rs 125, or 0.25 percent, at Rs 49,104 on a business turnover of 7,920 lots.
The value of the February and April’s contracts traded so far is Rs 2,573.71 crore and Rs 159.29 crore, respectively.
Similarly, Gold Mini contract for February decreased Rs 110, or 0.22 percent at Rs 49,128 on a business turnover of 15,181 lots.
Trading Strategy
Axis Securities
MCX Gold price is trading near the resistance line under consolidation range, price is expected to trade positively. Any breakout above Rs 49,500 would push the price towards Rs 49,800-49,900 level in intraday. The momentum indicator Relative Strength Index (RSI) is trading at 56 it is forming higher high which is a positive sign.
Tapan Patel- Senior Analyst (Commodities), HDFC Securities
We expect gold prices to trade sideways to up with COMEX gold resistance at $1870, support at $1830. MCX Gold February support lies at Rs 48,800 with resistance at Rs 49,600.
Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited
Technically, International gold is trading on a marginally positive note where resistance is at $1,865-1,870 levels which when broken could lead the prices to test the levels of $1,885-1,900. The support is at $1,830-1,810 levels above which bullish momentum is likely to continue.
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