Gold prices slipped for the fourth consecutive day by Rs 255 to Rs 46,753 per 10 gram at the Mumbai retail market on rising US dollar and subdued global cues. In the domestic market, the yellow metal prices fell Rs 2,279 or 4.65 percent in the month of June.
The rate of 10 gram 22-carat gold in Mumbai was Rs 42,826 plus 3 percent GST, while 24-carat 10 gram was Rs 46,753 plus GST. The 18-carat gold quoted at Rs 35,065 plus GST in the retail market.
The bullion prices were also pressured by a discount in the domestic physical markets and lower Chinese imports reflecting weaker consumer demand.
Investors will be on the lookout for the US non-farm payrolls report for June, due on Friday, for clues on what the Fed might do next. A poll has forecast a growth of 690,000 jobs in June to add to May’s expansion of 559,000.
Meanwhile, other data showed that U.S. consumer confidence jumped to its highest level in nearly 1-1/2 years in June as growing labour market optimism amid a reopening economy offset concerns are higher inflation.
The US dollar climbed to Rs 92.08, up 0.05 percent against a basket of six rival currencies. The dollar moved higher as investors increased bets that Friday’s U.S. jobs report would come in strong, which could cement the Federal Reserve’s recent hawkish stance.
Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund were unchanged at 1,045.78 tonnes. The ETF has a market value of $59.00 billion.
Spot gold marginally fell by $0.51 to $1,760.66 an ounce at 1157 GMT in London trading.
MCX Bulldesk modestly advanced 31 points or 0.22 percent, at 14,416 at 17:28. The index tracks the real-time performance of MCX Gold and MCX Silver futures.
Sriram Iyer, Senior Research Analyst at Reliance Securities said, “The uncertainty of the monetary policy of the Federal Reserve in regard to inflation and the timeline to taper and raise rates could continue to weigh heavily on some market participants minds. At the same time, some investors are likely anticipating better-than-expected jobs data, which should increase calls for higher interest rates. This would lead to a stronger U.S. Dollar, pressuring gold prices further. However, labour market disappointment should provide short-term support for gold.”
“Technically, LBMA Gold Spot could see a sideways to marginal downside momentum where below $1,760 will continue Bearish momentum up to $1,752-$1,743 levels. Resistance is at $1768-$1775 levels”, Iyer added.
“COMEX gold trades lower near $1757/oz. Gold remains pressurized by Fed’s monetary tightening expectations and US economic optimism which has underpinned the US dollar. ETF investors also moved to sidelines. However, supporting price is renewed virus concerns and mixed economic data from major economies. Gold may witness choppy trade but general bias might be weak owing to Fed's tightening expectations”, said Ravindra Rao, CMT, EPAT, VP- Head Commodity Research at Kotak Securities.
The gold/silver ratio currently stands at 68.92 to 1, which means 68.92 ounces of silver is required to buy an ounce of gold.
Silver prices modestly rose by Rs 26 to Rs 67,832 per kg against its closing price on June 29.
In the futures market, the gold rate touched an intraday high of Rs 46,744 and an intraday low of Rs 46,461 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 gained Rs 20, or 0.04 percent, to Rs 46,575 per 10 gram in evening trade on a business turnover of 11,437 lots. The same for October jumped Rs 25, or 0.05 percent, to Rs 46,890 on a business turnover of 3,876 lots.
The value of August and October’s contracts traded so far is Rs 1,254.62 crore and Rs 37.46 crore, respectively.
Similarly, Gold Mini contract for August slightly up Rs 40, or 0.09 percent at Rs 46,625 on a business turnover of 18,790 lots.
Tapan Patel- Senior Analyst (Commodities), HDFC Securities
Gold prices extended decline falling to two month low on Wednesday. Gold prices witnessed selling on dollar rally on expectations of early FED tapering of bond buying program. Market focus will remain on today’s ADP private payroll numbers in the evening session.
We expect gold prices to trade sideways to down for the day with COMEX gold support at $1740 and resistance at $1,770 per ounce. MCX Gold August support lies at Rs 46,200 and resistance at Rs 46,800 per 10 gram.
Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited
Technically, International gold is trading with bearish momentum near support of $1,760-$1,750 levels and may breach them in the coming sessions. On the domestic front, MCX August Gold is trading on a flat note and is trading below the support zone of Rs 46,800-Rs 46,600 levels. The market has breached rectangle box and traded near Rs 46,300 levels in the previous session.
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