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Gold prices near Rs 47,000/10 gm as US dollar slides; silver rises Rs 465 a kg

As long as prices stay above $1,760 we can expect the positive bias to remain intact but it is required to close above $1800 to continue major rallies, said Hareesh V.

Mumbai / May 06, 2021 / 06:15 PM IST

Gold prices soared by 239 to Rs 46,992 per 10 gram in the Mumbai retail market on strong global cues, but further advanced was restricted by a firm rupee. The retreat in the US dollar and concerns over the second wave of coronavirus in many countries continue to offer lower-level support to the yellow metal.

The bullion metal continues bullish momentum and gained $25.53 or 1.44 percent in May and making efforts to break the $1,800/oz resistance zone.

The rate of 10 gram 22-carat gold in Mumbai was Rs 43,045 plus 3 percent GST, while 24-carat 10 gram was Rs 46,992 plus GST. The 18-carat gold quoted at Rs 35,244 plus GST in the retail market.

Hareesh V, Research Head Commodities at Geojit Financial Services said, “As long as prices stay above $1760 we can expect the positive bias to remain intact but it is required to close above $1800 to continue major rallies. Anyhow, a close below $1720 is a sign of immediate trend reversal.”

The retail sales of jewellery have come to a halt due to restrictions imposed by state governments to combat the surge in virus cases. Major jewellery centres across the country are shut and business has been negligible.

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Market participants will keep an eye on US weekly jobless claims data expected today and US non-farm payroll data scheduled tomorrow.

The US dollar slides to 90.96 or down 0.36 percent against a basket of six rival currencies. The currency has turned choppy amid uncertainty over Fed’s stance as investors continue to access rebound in growth against the possibility of policy tightening.

Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund rose by 1.1 tonnes to 1,019.33 tonnes. 

Spot gold climbed by $7.80 to $1,794.54 an ounce at 1212 GMT in London trading.

MCX Bulldesk increased 93 points or 0.63 percent, at 14,829 at 17:43. The index tracks the real-time performance of MCX Gold and MCX Silver futures.

Navneet Damani, Vice President, Motilal Oswal said, “Gold prices continue to trade in narrow range amidst the positive comments from Treasury Secretary Yellen regarding the economy and mixed economic data from the US. After, Treasury Secretary Yellen's comments regarding raising rates and downplaying Inflation made the market a bit cautious.” 

“Few fed officials had their speech scheduled yesterday, wherein Fed Governor Bowman raised all the positive points for the U.S. and on other hand, Chicago Fed President supported the loose policy and raised concerns regarding rising inflation. US service PMI data was recorded better than the expectations.” 

The broader range on COMEX could be between $1775- 1820 and on the domestic front, prices could hover in the range of Rs 46,920- 47,535.

“COMEX gold trades higher near $1,792/oz supported by weakness in the US dollar and drop in the US 10yr bond yield. Gold has turned choppy as mixed US economic data and mixed comments from Fed officials has clouded outlook for Fed’s monetary policy. Also support from mixed economic data, persisting virus risks and continuing stimulus measures is countered by a lack of ETF buying and concerns about Indian consumer demand. Gold may remain choppy as market players asses Fed's stance but general bias is still on the upside amid persisting virus risks”, said Ravindra Rao, CMT, EPAT, VP- Head Commodity Research at Kotak Securities. 

The gold/silver ratio currently stands at 67.80 to 1, which means the number of silver ounces required to buy one ounce of gold.

Silver prices jumped by Rs 465 to Rs 69,300 per kg from its closing on May 5.

In the futures market, the gold rate touched an intraday high of Rs 47,263 and an intraday low of Rs 47,000 on the Multi-Commodity Exchange (MCX). For the June series, the yellow metal touched a low of Rs 44,108 and a high of Rs 51,924.

Gold futures for June delivery gained Rs 109, or 0.23 percent, at Rs 47,109 per 10 gram in evening trade on a business turnover of 10,275 lots. The same for August rose Rs 141, or 0.30 percent, at Rs 47,471 on a business turnover of 4,267 lots.

The value of June and August’s contracts traded so far is Rs 1,970.08 crore and Rs 164.22 crore, respectively.

Similarly, Gold Mini contract for June edged higher Rs 133, or 0.28 percent at Rs 47,109 on a business turnover of 17,363 lots.

Trading Strategy

Tapan Patel, Senior Analyst (Commodities), HDFC Securities

Gold prices witnessed recovery after the US treasury secretary clarifies her previous statement on interest rates. She clarified that she neither predicting nor recommending a hike in key interest rates. Gold prices also got support from a weaker dollar as traders and investors are waiting for key US data.

We expect gold prices to trade sideways to up for the day with COMEX gold support at $1,770 and resistance at $1,800 per ounce. MCX Gold June support lies at Rs 46,900 and resistance at Rs 47,500 per 10 gram.

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Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Sandeep Sinha

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