Gold prices fall marginally to Rs 44,847/10 gm, silver tumbles by Rs 998 a kg

Image: PTI

Gold prices declined slightly by Rs 90 to Rs 44,847 per 10 gram in the Mumbai retail market, tracking sharp appreciation in the rupee and weak global cues. The yellow metal struggled to get past the stiff resistance zone of $1,750/oz on a closing basis.

The rate of 10 gram 22-carat gold in Mumbai was Rs 41,080 plus 3 percent GST, while 24-carat 10 gram was Rs 44,847 plus GST. The 18-carat gold quoted at Rs 33,635 plus GST in the retail market.

Speaking at the 3rd ICC Gems & Jewellery Summit organized by the Indian Chamber of Commerce (ICC), P R Somasundaram, Managing Director, World Gold Council informed that gold category marketing is on the anvil. “For 2030 we should build more trust with all stakeholders similar to that of the financial asset class”, he said. Mr Somasundaram also informed that the Jewelry sector doesn’t account for 7% of GDP and instead 1 to 1.3% of GDP. He said that there is a need to build data, infrastructure and a self-governance framework before we approach the Government for policy.

The yellow metal prices were getting support from surging coronavirus cases and Treasury yields cool off after hitting 13-month high of 1.74 percent last week.

Market players will focus on US Fed Chair Jerome Powell’s speech and the US existing home sales data to be scheduled later in the day.

The CFTC data showed that money managers increased net long positions by 12,845 lots in the last week.

The US dollar trades lower at 91.79, or down 0.14 percent against a basket of six rival currencies. 

The US 10-year treasury yields declined to 1.68 percent, down 5 basis point following reassuring comments from Federal Reserve officials.

Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund remained unchanged at 1052 tonnes last week.

Spot gold dropped by $7.90 to $1,737.50 an ounce at 11:54 GMT in London trading.

MCX Bulldesk decreased 124 points or 0.87 percent, to 14,210 at 17:34. The index tracks the real-time performance of MCX Gold and MCX Silver futures.

“Gold prices ended in green for the second consecutive week on inflation hedge despite a stronger dollar. The traders and investors weighed FED comments which led to buying in safe-haven assets. The yellow metal rallied even after US 10 year treasury yields rose to 13 month highs while equities declined on higher inflation concerns. The US FED chairman signalled lower interest rates until 2023 avoiding any comment on bond buying program which raised uncertainty among the investors”, said Tapan Patel- Senior Analyst (Commodities), HDFC Securities.

The gold/silver ratio currently stands at 68.13 to 1, which means the number of silver ounces required to buy one ounce of gold.

Silver prices fell by Rs 998 to Rs 65,817 per kg from its closing on March 19. 

In the futures market, the gold rate touched an intraday high of Rs 45,040 and an intraday low of Rs 44,630 on the Multi-Commodity Exchange (MCX). For the April series, the yellow metal touched a low of Rs 44,150 and a high of Rs 51,931.

Gold futures for April delivery slipped by Rs 235, or 0.52 percent, at Rs 44,786 per 10 gram in evening trade on a business turnover of 8,112 lots. The same for June slipped by Rs 224, or 0.49 percent, to Rs 45,100 on a business turnover of 9,057 lots.

The value of the April and June’s contracts traded so far is Rs 2,086.29 crore and Rs 341.08 crore, respectively.

Similarly, Gold Mini contract for April edged lower by Rs 236, or 0.52 percent to Rs 44,772 on a business turnover of 21,153 lots.

Trading Strategy

Tapan Patel, Senior Analyst (Commodities), HDFC Securities

Gold prices traded under pressure limiting the upside on Monday as traders and investors are eyeing US bond auctions this week. The yellow metal also witnessed some selling in early trade on stronger US bond yields and a firm dollar. Gold prices are getting support on pandemic worries over lockdown fears in Europe.

We expect gold prices to trade sideways to lower for the day with COMEX spot gold support seen at $1,710 and resistance at $1,740. MCX Gold April support lies at Rs 44,500 and resistance lies at Rs 44,900.

Axis Securities

The brokerage advises its clients to sell gold at Rs 44,800 with a stop loss at Rs 45,000 and a target of Rs 44,500.

Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited

International gold prices are trading on the weaker side owing to reports of strong US Treasury yields and US dollar. The replacement of Turkey’s central bank head with a high interest rates critic has led to financial instability, resulting in the downfall of the yellow metal.

Technically, International gold is trading with a bearish momentum, where resistance is at $1,755 - $1,745 levels. Prices are sustaining above the support of $1,720 - $1,725.

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