Gold prices fell sharply by Rs 520 to Rs 50,627 per 10 gram in the Mumbai retail market on rupee appreciation and stronger equity market.
The rate of 10 gram 22-carat gold in Mumbai was Rs 46,374 plus 3 percent GST, while 24-carat 10 gram was Rs 50,627 plus GST. The 18-carat gold quoted at Rs 37,970 plus GST in the retail market.
The US dollar index gave up gains and traded weak at 93.46 levels down 0.08 percent.
The bullion metal prices were under pressure as China’s economy continued to expand in September reflecting the improvement in overseas demand and a balanced recovery boosted the risk appetite amongst investors.
Global finance leaders said the world economy had escaped a coronavirus- triggered collapse so far, but warned that failure to conquer the pandemic, maintain stimulus and tackle mounting debt among poor nations could crush fragile recovery.
Spot gold was trading higher $8.12 at $1,899.30 an ounce at 1206 GMT in London trading.
Gold holdings in SPDR ETF were unchanged at 1277.64 tonnes.
MCX iCOMDEX Bullion Index inched higher 75.97 points, or 0.49 percent, at 15,438.19 at 17:37. The index tracks the real-time performance of MCX Gold and MCX Silver futures.
Navneet Damani, Vice President, Motilal Oswal said, “Confusion", anxiety, and excitement are just a few words depicting the market emotions and movement of yesterday. There have been a series of updates which are contributing to the market volatility. Gold is hovering around the $1900 level amidst, a firm dollar and lack of agreement on new COVID relief bill.”
The broader trend on COMEX could be in the range of $1880- 1910 and on domestic front prices could hover in the range of Rs 50,150-50,650.
“COMEX gold trades higher near $1901/oz after a 1.8 percent decline yesterday. Gold weakened as the US dollar index bounced back from recent lows amid delay in US stimulus package, setback on vaccine front and rising virus cases in Europe. ETF investors also moved to sidelines after net inflows a day earlier. Gold may continue to witness choppy trade until there is more clarity on US stimulus however we maintain buy on dips view as concerns about the health of US economy may keep a check on US dollar”, said Ravindra Rao, VP- Head Commodity Research at Kotak Securities.
The gold/silver ratio currently stands at 83.36 to 1, which means the amount of silver required to buy one ounce of gold.
Silver prices plunged Rs 1,458 to Rs 60,738 per kg from its closing on October 13.
Also read: Silver futures trade firm at Rs 61,080/kg, faces resistance near Rs 62,000 levels
In the futures market, the gold rate touched an intraday high of Rs 50,478 and an intraday low of Rs 50,270 on the Multi-Commodity Exchange (MCX). For the December series, the yellow metal touched a low of Rs 48,384 and a high of Rs 56,379.
Gold futures for December delivery gained Rs 174, or 0.35 percent, at Rs 50,419 per 10 gram in evening trade on a business turnover of 14,955 lots. The same for February rose Rs 242, or 0.48 percent, at Rs 50,569 on a business turnover of 1,042 lots.
The value of the December and February’s contracts traded so far is Rs 2,726.44 crore and Rs 15.66 crore, respectively.
Similarly, Gold Mini contract for November edged higher Rs 186, or 0.37 percent at Rs 50,492 on a business turnover of 9,468 lots.
Trading strategy
Sriram Iyer, Senior Research Analyst at Reliance Securities
International Gold and silver prices were trading with gains this Wednesday evening in Asia trade as investors moved into bullion after a COVID-19 treatment would be launched quickly faded. However, upside remained capped as the US Dollar has rebounded over the last 2 sessions.
Looking ahead we see prices trade with an uptick during the rest of the session supported by safe-haven appeal.
Technically, LBMA Gold Spot is trading below 21 as well as 50 Daily Moving Average where it is trading below the upper band of Falling Channel formation. Below $1,902 will continue to see downside pressure $1,874-$1,867 levels where upside resistance is at $1,905-$1,912 levels.
Domestic bullion on MCX is trading with small gains, tracking firm overseas prices. Technically, MCX Gold December contract has given a sharp fall from Upper band of Rising Channel formation where it has halted near 100-Daily Moving Average which is placed at Rs 50,360 levels where below this level could see a Bearish move up to Rs 49,900-49,300 levels. However, bounced back above Rs 50,400 could see upside push up to Rs 50,700 levels.
Tapan Patel- Senior Analyst (Commodities), HDFC Securities
Gold prices pared some previous loses on dollar fluctuations. Another setback on finalizing US aid package kept selling pressure on gold prices while gold ETF holding at SPDR gold shares continued to score highs on market uncertainties which rose at 1277.65 tonnes as of Tuesday.
We expect gold prices to trade sideways to down for the day with COMEX gold resistance at $1920, support at $1880. MCX Gold October support lies at Rs 50,000 with resistance at Rs 50,600.
Anuj Gupta - DVP- Commodities and Currencies Research, Angel Broking Ltd
As for today, traders can go for sell in gold at Rs 50,600 levels with the stop loss of Rs 51,100 levels for the target of Rs 49,500 levels. They can also go for sell in Silver at Rs 61,200 levels, with the stop loss of Rs 61,700 levels and for the target of Rs 59,800 levels.
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