Gold prices jump to Rs 48,324 per 10 gram on safe-haven appeal; silver slumps

Gold prices edged higher for the third straight day by Rs 301 to Rs 48,324 per 10 gram in the Mumbai retail market on rupee weakness and selloff in global equity markets. The precious metal gained on safe-haven appeal plan on worries over Delta variant of the virus which has slowed the economic recovery.

The rate of 10 gram 22-carat gold in Mumbai was Rs 44,265 plus 3 percent GST, while 24-carat 10 gram was Rs 48,324 plus GST. The 18-carat gold quoted at Rs 36,243 plus GST in the retail market.

The US Treasury yields dropped after minutes from the Federal Reserve’s June meeting showed officials felt its “substantial progress” goal on economic recovery has not yet been met.

The June FOMC minutes confirm that the Federal Reserve is edging closer to tapering asset purchases.

The US dollar traded lower to 92.47, down 0.19 percent against a basket of six rival currencies. 

Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell by 1.8 tonnes to 1,040.48 tonnes. The ETF has a market value of $60.36 billion.

Spot gold rose by $12.89 to $1,816.57 an ounce at 1225 GMT in London trading.

MCX Bulldesk increased 57 points or 0.39 percent, at 14,810 at 17:56. The index tracks the real-time performance of MCX Gold and MCX Silver futures.

“Gold traded steady hovering above $1,800 as lower US Treasury yields countered a stronger dollar after minutes from the Federal Reserve’s last meeting showed that the central bank is moving towards tapering its asset purchases as soon as this year. Benchmark US 10Y yields dropped to their lowest since February 19; trading around 1.3 marks. Fed officials in the minutes mentioned that last month they felt that the substantial progress on the US economic recovery has not been met yet,” said Navneet Damani, VP – Commodities Research at Motilal Oswal Financial Services.

“Although, they agreed to be ready to act if inflation or other risks materialized, Fed minutes also showed that the tapering process could be seen earlier than expected. The focus will be on the ECB's 18-month strategy review, redefining its inflation target and also discuss other issues. Market participants will also keep an eye on the US weekly jobless claims data scheduled later today,” he said. 

The broader range on COMEX could be $1788- 1815 and on the domestic front, prices could hover in the range of Rs 47,550- 48,150.

“COMEX gold recovered from early losses as the US 10-year bond yield slipped below 1.30 along with the US Dollar that retreated from the day’s high level. Earlier gold was pressurised by firmness in the US dollar as FOMC minutes added to uncertainty about Fed’s monetary tightening. However, supporting price is renewed virus concerns and uneven global economic recovery. Gold may remain supported providing US Dollar continues to fall and the bond yields remain at lower levels,” Ravindra Rao, CMT, EPAT, VP- Head Commodity Research at Kotak Securities.

The gold/silver ratio currently stands at 69.99 to 1, which means 69.99 ounces of silver is required to buy an ounce of gold.

Silver prices eased by Rs 386 to Rs 69,042 per kg against its closing price on July 7. 

In the futures market, the gold rate touched an intraday high of Rs 48,290 and an intraday low of Rs 47,655 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 gained Rs 351, or 0.73 percent, to Rs 48,261 per 10 gram in evening trade on a business turnover of 10,308 lots. The same for October soared Rs 410, or 0.85 percent, to Rs 48,554 on a business turnover of 5,559 lots.

The value of August and October’s contracts traded so far is Rs 2,967.92 crore and Rs 357.18 crore, respectively.

Similarly, Gold Mini contract for August edged higher by Rs 319, or 0.67 percent at Rs 48,206 on a business turnover of 14,236 lots.

Trading Strategy

Tapan Patel- Senior Analyst (Commodities), HDFC Securities

We expect gold prices to trade sideways to up for the day with COMEX gold support at $1,790 and resistance at $1,820 per ounce. MCX Gold August support lies at Rs 47,600 and resistance at Rs 48,200 per 10 gram.

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

Technically, Gold is trading with a positive bias above $1,800 levels after a bullish breakout earlier this week. We may expect a rise from here in the coming sessions. On the domestic front, MCX Gold August opened on a negative note but is trading with bullish momentum. We may expect bullish momentum to continue during the evening hours as well.

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