Gold price declined for the third successive day by Rs 338 to Rs 46,101 per 10 gram in the Mumbai retail market on rising bond yields. The yellow metal traded with losses as progress in global economic recovery from pandemic has dampened the demand for safe-haven investments.
The bullion tumbled 2.71 percent or Rs 1,285 during the week in the domestic market.
The rate of 10 gram 22-carat gold in Mumbai was Rs 46,229 plus 3 percent GST, while 24-carat 10 gram was Rs 46,101 plus GST. The 18-carat gold quoted at Rs 34,576 plus GST in the retail market.
Nish Bhatt, Founder & CEO, Millwood Kane International, said: “Gold prices have slipped below the crucial Rs 46,000/10gm level, to hit an 8-month low. The rise in the US Treasury yield and stronger dollar, optimism of a larger economic stimulus package, and the vaccination drive has led to downside pressure on gold prices.”
“The rising treasury yield is indicative of a recovery in the US economy. The yellow metal has also lost investor's interest as the vaccination drive picks up pace and new cases have dropped worldwide. Gold prices in India have lost over Rs 10,000/10gm or 18 percent from its highs witnessed in August 2020. Going forward, risk of a second wave of cases, easy liquidity and global economic recovery will guide gold prices,” he said.
US 10-year bond yield jumped to a one-year high of 1.33 percent earlier this week and currently stands near 1.30. Global bond yields also shot up, tracking US yields denting the non-yielding metal’s appeal.
Gold remains under incessant selling pressure while Bitcoin scaled to fresh highs this week raising debate about cryptocurrency becoming digital gold and this is visible from a diverging trend in these assets.
Market participants are keeping an eye on the preliminary Manufacturing and Service PMI data expected from major economies later in the day.
The US dollar trades lower at 90.26, or 0.37 percent against a basket of six currencies.
Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund remained unchanged at 1,132.89 tonnes.
Spot gold fell marginally by $4.61 to $1,771.08 an ounce at 1212 GMT in London trading.
MCX Bulldesk edged lower by 45 points or 0.31 percent at 14,690 at 17:43. The index tracks the real-time performance of MCX Gold and MCX Silver futures.
Navneet Damani, Vice President, Motilal Oswal, said: “Gold prices fell to their lowest in nearly three months and headed for their worst week since end-November, as recent strength in US Treasury yields dented the non-yielding metal's appeal. Benchmark US Treasury yields edged higher, having hit a near one-year peak earlier in the week. All updates regarding the COVID-19 stimulus bill and vaccine for COVID-19 and the new virus variant are impacting the market sentiment.”
The broader range on COMEX could be between $1755 and $1782, and on the domestic front, prices could hover in the range of Rs 45,700- 46,300.
“COMEX gold trades flat near $1772/oz after testing the lowest level since June 2020. Weighing on the gold price is higher bond yields and continuing ETF outflows which show weaker investor interest.US Dollar has retreated from higher levels and that has supported gold prices today. Gold's sharp sell-off makes it vulnerable to further losses; however, the losses seem overstretched given the emphasis on continuing stimulus measures,” said Ravindra Rao, VP- Head Commodity Research at Kotak Securities.
The gold/silver ratio currently stands at 67.38 to 1, which means the number of silver ounces required to buy one ounce of gold.
Silver prices dropped by Rs 286 to Rs 68,414 per kg from its closing on February 18.
In the futures market, the gold rate touched an intraday high of Rs 46,098 and an intraday low of Rs 45,861 on the Multi-Commodity Exchange (MCX). For the April series, the yellow metal touched a low of Rs 45,861 and a high of Rs 51,931.
Gold futures for April delivery fell Rs 131, or 0.28 percent, at Rs 45,995 per 10 gram in evening trade on a business turnover of 14,159 lots. The same for June slipped by Rs 220, or 0.48 percent, at Rs 46,075 on a business turnover of 1,990 lots.
The value of the April and June’s contracts traded so far is Rs 1,916.55 crore and Rs 32.75 crore, respectively.
Similarly, Gold Mini contract for March eased by Rs 161, or 0.35 percent at Rs 45,885 on a business turnover of 21,725 lots.
Tapan Patel, Senior Analyst (Commodities), HDFC Securities
Gold prices reported a seventh straight decline on Friday. The yellow metal traded under pressure with the rise in bond yields which dampened demand for safe haven.
We expect gold prices to trade sideways to down with COMEX spot gold support lies at $1,760 and resistance at $1,790. MCX Gold April support lies at Rs 45,800 and resistance lies at Rs 46,300.
Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited
International Gold is trading near $1,775 levels and may continue bearish momentum up to $1,760-1,750 levels. On the MCX, prices breached the support at Rs 46,000 levels and may further decline to Rs 45,700 levels in the upcoming session.
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