Gold prices were steady during the week to settle at Rs 48,542 per 10 gram as players sat on the sidelines ahead of inflation data. Precious metal prices saw little reaction to the GDP and new jobless claims data. However, upbeat US data showed that a recovery in the world’s largest economy was on track.
The yellow metal rose in three out of five trading sessions on the MCX and ended the week with a gain of Rs 138. COMEX gold, on the other hand, rose $21 or 1.16 percent during the same period.
The bullion metal has been trading higher than 20, 50 and 100 days' moving averages but lower than the 5 and 200 days’ moving averages on the daily chart. The momentum indicator Relative Strength Index (RSI) is at 61.53, signalling bullish sentiment in prices.
The precious metal consolidated in a narrow range and managed to close above the $1,900/oz level on a weekly basis.
The CFTC data showed that money managers increased their net long positions by 20,007 lots in last week.
The core personal consumption expenditures price index, a key gauge of inflation by the Fed Reserve, rose 3.1 percent in April from a year earlier.
On the data front, the Labour Department reported that the number of Americans filing unemployment benefits fell below 500,000, the lowest since the pandemic begun.
The US dollar index slightly soared 0.09 percent to close at 90.04 against the rival currencies, while US 10-year treasury yields fell to 1.581 percent during the week. The dollar index ended with a modest gain of 0.04 percent through the week and touched a low of 89.51.
The spot rupee continued its uptrend and rose by 0.52 percent to hit a 10-week high of 72.45 against the dollar for the week.
Gold ETF holdings were unchanged as holdings at SPDR Gold Shares were at 1043 tonnes for the week.
Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited, said: “Gold moved by $100 in May and the prices are looking bullish because a massive amount of fiscal spending expedited economic recovery. Also, Fed is keeping its monetary policy extremely dovish, fuelling the prices of the commodity.”
“Currently, COMEX gold is trading at $1,892 levels and it has made good base near $1840-$1850 regions. In my view range for the COMEX Gold for June is $1870-$1960. MCX Gold gained Rs 2,500 in May and currently, August Contract is trading at Rs 48,982 which made good support around Rs 48,300 levels. For June it could trade in the range of Rs 48300- Rs 51200,” Purohit noted.
"Gold prices rallied for the fourth week on the trot after prices breached key psychological resistance at $1,900 per ounce. The inflation worries were the central point for this week’s bull in the yellow metal. Gold prices are set to report the best monthly gains in 10 months with a rise of 8 percent in May. Gold prices traded higher paring losses on higher inflation concerns along with the rise in personal consumption expenditure and higher PCE numbers," said Tapan Patel, Senior Analyst (Commodities), HDFC Securities.
The spot gold/silver ratio currently stands at 68.17 to 1 indicating that gold has outperformed silver.
Spot gold settled with a profit of $7.16 at $1,903.66 an ounce in London trading.
Gold futures for June delivery eased by Rs 55, or 0.11 percent, to settle at Rs 49,462 per 10 gram with a business turnover of 471 lots. The same for August fell by Rs 11, or 0.02 percent, to Rs 49,155 on a business turnover of 12,349 lots.
Recently, the Fed speakers, even though continued to support the dovish central bank's policy, added that they might need to slowly step off the accelerator of the QE or at least have a debate on the topic.
On the economic calendar front, next week the US is expected to release job numbers for May, which could have an impact on prices.
Sriram Iyer, Senior Research Analyst at Reliance Securities, said, “We believe that there is a real possibility that the Fed may hold its next monetary policy meeting on June 15 and 16. However, there could be also a possibility that the Fed may see through the higher inflation and keep supporting the economy and still say that the inflation may be transitory and economic recovery may be uneven.”
"We can see that the markets could remain in a very broad trading range next week as well," he said.
Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited, said, “Gold is trading higher high and lower low on the weekly charts and prices are taking support of 21 Days' SMA on the daily charts. Inflationary fears and massive fiscal stimulus in the US dragging dollar down globally, which is also supporting the gold prices.”
Sriram Iyer, Senior Research Analyst at Reliance Securities, said, “On the charts, LBMA Gold Spot holds a resistance zone of $1915-$1935 where it could see a correction up to $1870-$1840 levels.”
“On the domestic front, MCX Gold Aug below 48,900 could see a bearish momentum up to Rs 48,300-47,800 where it holds resistance at Rs 49,400-49,950 levels,” Iyer noted.
Reliance Securities advised its clients to buy August Gold futures on dips near Rs 48,600 with a stop loss at Rs 48,400 and a target at Rs 49,000.
Patel expects gold prices to trade sideways to up in the coming week with COMEX spot gold resistance at $1940 per ounce and support at $1860 per ounce. At MCX, Gold June prices have near term resistance at Rs. 49200 per 10 grams and support at Rs 48000 per 10 gram.
“For the upcoming sessions, MCX Gold futures likely to continue its bullish momentum towards Rs 49,700. Traders should go for buy-on-dips opportunity around the level of Rs 48,200-48,150, keeping a stop loss at Rs 47,900,” said Purohit.
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