Gold prices jump nearly 2% this week to Rs 50,305/10 gm, bias bullish for short term

gold

Gold prices edged lower to settle at Rs 50,305 per 10 gram on December 19 as participants trimmed their long position as seen by the open interest. The precious metal ended the week with a gain of Rs 980 or 1.99 percent for the week.

The yellow metal traded in the positive territory for three out of five sessions during the week, closing above the key psychological barrier of Rs 50,000/10 grams for two successive days tracking the general weakness in dollar and expectation of further US stimulus.

In the retail market, the bullion metal settled at Rs 50,108 per gram on Friday up 0.20 percent on the flat rupee and weak global cues. The premium charged by a dealer over official domestic price turned into a discount for the first time in over a month to $1 per troy ounce as high prices kept retail buyers away.

The rate of 10 gram 22-carat gold in Mumbai was Rs 45,899 plus 3 percent GST, while 24-carat 10 gram was Rs 50,108 plus GST. The 18-carat gold quoted at Rs 37,581 plus GST in the retail market.

The US dollar settled modestly up at 89.83 or up 0.10 percent yesterday against a basket of six currencies, down 1.21 percent for the week.

The CFTC data showed that money managers increased net long positions to a seven-week high by 1091 lots in last week.

Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund were unchanged at 1,167.82 tonnes.

MCX Bulldesk declined 69 points, or 0.44 percent to settle at 15,653. The index tracks the real-time performance of MCX Gold and MCX Silver futures.

“Gold prices witnessed breakout above the key resistance of $1,876 as accommodative stance form US FOMC with ultra-low interest rates boosted buying in gold. Gold prices extended gains as rising hopes for US relief package pushed the dollar index down below the 90 mark. The rising COIVD-19 cases across world and lockdown measures in UK, Europe and some parts of US may keep risk premium high in gold prices”, said Tapan Patel- Senior Analyst (Commodities), HDFC securities.

The gold/silver ratio currently stands at 75.32 to 1, which means the amount of silver required to buy one ounce of gold. The decline in the ratio indicates that silver has outperformed gold.

Silver prices gained Rs 50 to Rs 66,519 per kg from its closing on December 17.

In the futures market, the gold rate touched an intraday high of Rs 50,469 and an intraday low of Rs 50,105 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 slides Rs 85, or 0.17 percent, to settle at Rs 50,305 per 10 gram with a business turnover of 11,371 lots. The same for April slipped Rs 122, or 0.24 percent, at Rs 50,332 on a business turnover of 1,755 lots.

The value of the February and April’s contracts traded on December 11 was Rs 3,976.62 crore and Rs 194.30 crore, respectively.

Similarly, Gold Mini contract for January eased Rs 196, or 0.39 percent to close at Rs 50,067 on a business turnover of 11,033 lots.

“We expect gold prices to trade in a current range with a bullish bias for the short term with COMEX spot gold having strong resistance near $1,890/1,910 per ounce and support at $1,850 per ounce. At MCX, Gold February prices have near term resistance at Rs 50,800 per 10 grams and support at Rs 49,500 per 10 gram”, Patel added.

Spot gold settled with a marginally down $3.98 at $1,881.49 an ounce on Friday in London trading.

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