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Gold prices flat at Rs 47,761/10 gm ahead of Fed decision; silver corrects Rs 602 a kg

The gold/silver ratio currently stands at 71.94 to 1, which means 71.94 ounces of silver is required to buy an ounce of gold.

Mumbai / July 28, 2021 / 06:41 PM IST

Gold prices were steady at Rs 47,761 per 10 gram in the Mumbai retail market on lacklustre global trend, firm rupee ahead of Fed policy decision later today. The yellow metal traded in a narrow range owing to a recovery in the dollar from the lower levels.

The price of 10 gram, 22-carat gold in Mumbai was Rs 43,749 plus 3 percent GST, while 24-carat 10 gram stood at Rs 47,761 plus GST. The 18-carat gold is quoted at Rs 35,821 plus GST in the retail market.

Investors await the conclusion of a two-day meeting of Fed policymakers that began yesterday. Officials are expected to discuss plans to eventually taper off the Fed’s bond-buying programme.

US. consumer confidence data were recorded better than expectations to a 17-month high in July, with households’ spending plans rising even as concerns about higher inflation lingered.

Asian equities extended decline as Chinese stock markets struggle to gain pace after recent rout and rising coronavirus cases supported bullion as a safe haven.

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The US dollar traded firm at 92.56, up 0.14 percent against a basket of six rival currencies.

Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund remained unchanged at 1,025.64 tonnes, the lowest since May 3. The ETF has a market value of $59.34 billion.

Spot gold slightly dipped by $0.70 to $1,798.15 an ounce at 12:10 GMT in London trading.

MCX Bulldesk declined by 20 points or 0.14 percent, at 14,460 at 17:40. The index tracks the real-time performance of MCX Gold and MCX Silver futures.

“Gold continues to trade steady hovering near the $1,800 level amidst volatility in U.S. dollar and Yields, though gains were limited, as a cautious approach is followed by the investors ahead of a Federal Reserve meeting. Although, on other hand, base metals witnessed a fall in yesterday's session which was followed by silver as well. Gold/silver ratio also witnessed a rebound from the lows of 65 to 73 level in the last few sessions”, said Navneet Damani, VP – Commodities Research at Motilal Oswal Financial Services.

“Caution is advised ahead of the FOMC policy meet and comments from Governor Powell. The broader range on COMEX could be between $1792- 1813 and on the domestic front, prices could hover in the range of Rs 47,300- 47,920”, he added.

The gold/silver ratio currently stands at 71.94 to 1, which means 71.94 ounces of silver is required to buy an ounce of gold.

Silver prices fell by Rs 602 to Rs 66,386 per kg against its closing price on July 27.

In the futures market, the gold rate touched an intraday high of Rs 47,689 and an intraday low of Rs 47,470 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 dropped Rs 40, or 0.08 percent, to Rs 47,533 per 10 gram in evening trade on a business turnover of 3,282 lots. The same for October edged lower Rs 159, or 0.33 percent, to Rs 47,620 on a business turnover of 11,567 lots.

The value of August and October’s contracts traded so far is Rs 1,367.03 crore and Rs 655.89 crore, respectively.

Similarly, Gold Mini contract for August slipped Rs 41, or 0.09 percent at Rs 47,510 on a business turnover of 8,528 lots.

Trading Strategy

Tapan Patel- Senior Analyst (Commodities), HDFC Securities

Gold prices fluctuated ahead of the outcome of the US FOMC meeting and comments from the FED chairman. The weak Asian equity indices also supported gold prices to limit the downside of China crackdown on tech companies. 

We expect gold prices to trade sideways to down with COMEX spot gold resistance at $1810 and support at $1790 per ounce. MCX Gold August support lies at Rs. 47200 and resistance at Rs.47700 per 10 gram.

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

Technically, International Gold is trading with a negative bias near $1,800 levels and are sustaining above support of $1,798-$1,790 levels. On the domestic front, MCX August gold is trading with negative bias. The prices are trading in a rectangle box from the past four sessions where resistance is at Rs 47,800 and support is at Rs 47,300. We may witness bearish momentum during the evening session and the price may trade near Rs 47,300.

Axis Securities

The brokerage firm advised its clients to buy Gold AUG at Rs 47,500 with a stoploss at Rs 47,300 and a target of Rs 47,750.

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Sandeep Sinha
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