Gold prices were steady at Rs 48,986 per 10 gram in the Mumbai retail market on rupee depreciation and negative global cues. The yellow metal traded weaker weighed down by a stronger dollar and broader sell-off across assets class amid global risk aversion.
The rate of 10 gram 22-carat gold in Mumbai was Rs 44,871 plus 3 percent GST, while 24-carat 10 gram was Rs 48,986 plus GST. The 18-carat gold quoted at Rs 36,740 plus GST in the retail market.
The gold demand in India declined by 35 percent to 446.4 tonnes in 2020 against 690.4 tonnes in 2019, while total jewellery demand dropped by 42 percent to 315.9 tonnes compared to 544.6 tonnes in the same period, said World Gold Council in its 'Gold Demand Trend Reports for 2020'.
“India’s gold demand dropped by over a third in 2020 settling at 446.4 tonnes on the back of COVID-19 pandemic-induced lockdowns and lifetime high prices. However, the drop was significantly lower when viewed in value terms, 14 percent lower than 2019 as prices were up 34 percent hovering around Rs 50,000/10grams for most past of the year," said Somasundaram PR, Managing Director, India, World Gold Council.
“The Jewellery demand fell 42 percent to 315.9 tonnes and investment demand fell by 11 percent to 130.4 tonnes in 2020, mainly due to pandemic related restrictions. However, in Q4 2020, the festive period and the ensuing wedding season revived hopes and drew in jewellery demand worth 137.3 tonnes—the strongest quarter in the year," he said.
Somasundaram added that investment demand also showed significant resilience, growing 8 percent to 48.9 tonnes. Predictably, as lockdown eased and normalisation efforts were phased in, imports in Q4 rose 19 percent year-on-year, pointing to the positive impact of pent-up demand.
The US dollar traded slightly higher at 90.69, or 0.06 percent, against a basket of six currencies.
Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund decreased by 3.2 tonnes to 1,169.16 tonnes on weaker investor interest.
Spot gold eased by $4.03 to $1,840.17 an ounce at 1228 GMT in London trading.
MCX Bulldesk was down 49 points, or 0.32 percent, at 15,252 at 15:58. The index tracks the real-time performance of MCX Gold and MCX Silver futures.
Navneet Damani, Vice President, Motilal Oswal said: “Gold prices fell as investors flocked to the safety of the dollar after the global equity markets slipped and the US Federal Reserve raised concerns about the pace of economic recovery in the US. Update from Pfizer claiming that their vaccine is effective against the new coronavirus variant as well, hence hitting the overall sentiment for the precious metal pack.”
“COMEX gold trades lower near $1837/oz as the Fed painted a downbeat outlook for the US economy, but did not hint towards additional measures. The Fed’s downbeat growth outlook and ECB’s willingness to cut rates pushed the US dollar higher putting pressure on gold. ETF outflows also showed weaker investor interest. However, supporting price is lower bond yields, mixed economic data from major economies and rising virus cases. Gold has come under pressure, but we may not see sustained decline as US economic outlook and stimulus expectations may limit upside in the US dollar," said Ravindra Rao, VP- Head Commodity Research at Kotak Securities.
The gold/silver ratio currently stands at 74.25 to 1, which means the number of silver ounces required to buy one ounce of gold.
Silver prices rose Rs 217 to Rs 65,967 per kg from its closing on January 27.
In the futures market, the gold rate touched an intra-day high of Rs 48,797 and an intra-day low of Rs 48,642 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 slipped Rs 156, or 0.32 percent, at Rs 48,709 per 10 gram in evening trade on a business turnover of 3,361 lots. The same for April edged lower Rs 122, or 0.25 percent, at Rs 48,994 on a business turnover of 11,425 lots.
The value of the February and April’s contracts traded so far is Rs 1,820.22 crore and Rs 506.51 crore, respectively.
Similarly, Gold Mini contract for February slides Rs 134, or 0.27 percent at Rs 48,745 on a business turnover of 10,246 lots.
Trading Strategy
Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited
Technically, International Gold is trading in a sideways range since morning where it is sustaining above $1,830-1,820 levels. We may expect a bounce back from these levels and market may test $1,850 levels on the upside. Bullish sentiments may dominate the upcoming sessions and price may test the resistance levels of Rs 49,500-49,800 whereas support is at Rs 48,800-48,500 levels.
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