Gold prices continued to drop for the third consecutive day, shedding Rs 685 to Rs 49,534 per 10 gram in the Mumbai retail market after a sharp sell-off on Friday in the international market and rupee weakness.
The rate of 10 gram 22-carat gold in Mumbai was Rs 45,373 plus 3 percent GST, while 24-carat 10 gram was Rs 49,534 plus GST. The 18-carat gold quoted at Rs 37,151 plus GST in the retail market.
Investors pulled money from gold as a safe haven to plough into Treasuries as US 10-year note yields surged to March highs. People may also sell their Gold ETF holding as they are expecting stability in US Politics with President-elect Joe Biden ready to take charge and as the US begins to speed-up COVID-19 vaccine rollout.
The US economy shed jobs for the first time in eight months in December as the country buckled under an onslaught of COVID-19 infections. The economic calendar has a few important data points for this week.
The US dollar traded higher at 90.46, up 0.44 percent against a basket of six currencies.
The CFTC data showed money managers increased net-long positions to 16-week high by 15,268 lots in last week.
Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund rose by 11.38 ton to 1,182.11 tonnes on increased ETF inflows.
Spot gold was steady at $1,850.10 an ounce at 1207 GMT in London trading.
MCX Bulldesk was up 83 points, or 0.55 percent, at 15,268 at 17:39. The index tracks the real-time performance of MCX Gold and MCX Silver futures.
Navneet Damani, Vice President, Motilal Oswal said, “Gold showed some signs of recovery after slumping more than 4 percent in the previous session. Bullions saw a steep fall in the previous session as the dollar strengthened and US Treasury yields remained elevated, denting the non-yielding metal's appeal. US Treasury yields held firm after a plunge in payrolls last month raised expectations of more federal spending to aid the virus battered economy, helping the dollar rise 0.2 percent against rival currencies.”
The broader trend on COMEX could be in the range of $1,835-1,870 and on domestic front prices could hover in the range of Rs 49,125- 49,570.
The gold/silver ratio currently stands at 76.19 to 1, which means the number of silver ounces required to buy one ounce of gold.
Silver prices tanked Rs 2,361 to Rs 65,013 per kg from its closing on January 8.
In the futures market, the gold rate touched an intraday high of Rs 49,390 and an intraday low of Rs 48,635 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 surged Rs 251, or 0.51 percent, at Rs 49,218 per 10 gram in evening trade on a business turnover of 8,835 lots. The same for April gained Rs 252, or 0.51 percent, at Rs 49,264 on a business turnover of 6,036 lots.
The value of the February and April’s contracts traded so far is Rs 3,415.77 crore and Rs 349.52 crore, respectively.
Similarly, Gold Mini contract for February increased Rs 233, or 0.48 percent at Rs 49,268 on a business turnover of 16,321 lots.
Tapan Patel- Senior Analyst (Commodities), HDFC Securities
Gold prices rebounded from the lows made on Friday despite a stronger dollar as worries over rising coronavirus cases boosted buying in the yellow metal. Earlier, Gold prices declined as a rise in US long term bond yields triggered short unwinding in the dollar. The traders and investors rushed to book profits in precious metals on risk-on sentiments with buying in the dollar.
We expect gold prices to trade sideways to down with COMEX gold resistance at $1,880, support at $1,820. MCX Gold February support lies at Rs 48,900 with resistance at Rs 49,700.
Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited
Technically, International gold after breaching the psychological levels of $1,900 has declined more $80, taking support at $1,830-1,815 levels. The precious metal has resistance at $1,855-1,865 levels on the upside.
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