Gold prices fell for the second consecutive day by Rs 628 to Rs 50,421 per 10 gram in the Mumbai retail market on global equity market rally and rupee appreciation. The precious metal traded lower, tracking gains in the US dollar and firm Treasury yields.
The bullion metal prices turned volatile after touching a high of Rs 51,660 during the week, but gave up all the gains to end marginally higher - Rs 123, or 0.24 percent - for the week in the domestic market.
The rate of 10 gram 22-carat gold in Mumbai was Rs 46,186 plus 3 percent GST, while 24-carat 10 gram was Rs 50,421 plus GST. The 18-carat gold quoted at Rs 37,816 plus GST in the retail market.
The higher yields are also pulling some flight to safety money out of the bullion market. Although the prospect of further fiscal stimulus under a Democrat administration capped losses.
The FOMC minutes showed that the central bank wants to keep interest rate low until there is substantial progress and will give a clear signal to avoid taper tantrum.
The number of Americans filing first-time claims for jobless benefits unexpectedly dipped last week, which put some pressure on the metal prices.
The US dollar traded higher at 89.86, or up 0.08 percent against a basket of six currencies.
Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund decreased 4.7 tonnes to 1,182.11 tonnes.
Spot gold fell by $70.86 at $1,843.03 an ounce at 1742 GMT in London trading.
MCX Bulldesk slumped 217 points, or 1.36 percent, at 15,736 at 17:35. The index tracks the real-time performance of MCX Gold and MCX Silver futures.
“Gold prices languished as the US dollar and Treasury yields firmed, although hopes for additional stimulus in the world's largest economy kept bullion on course for a second straight weekly gain. A stronger dollar makes bullion more expensive for holders of other currencies, while higher bond yields increase the opportunity cost of holding the non-interest yielding gold. Democrats' control of the U.S. Senate has fuelled hopes of large stimulus measures and boosted inflation expectations, underpinning gold's appeal as an inflationary-hedge,” said Navneet Damani, Vice President, Motilal Oswal.
The broader trend on COMEX could be in the range of $1,875-1,925 and on domestic front prices could hover in the range of Rs 49,970- 50,600.”
The gold/silver ratio currently stands at 74.83 to 1, which means the amount of silver ounces required to buy one ounce of gold.
Silver prices plummet Rs 1,218 to Rs 67,374 per kg from its closing on January 7.
In the futures market, the gold rate touched an intraday high of Rs 50,799 and an intraday low of Rs 48,907 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 1,920, or 3.77 percent, at Rs 48,984 per 10 gram in evening trade on a business turnover of 9,200 lots. The same for April edged lower Rs 1,887, or 3.70 percent, at Rs 49,053 on a business turnover of 5,633 lots.
The value of the February and April’s contracts traded so far is Rs 9,326.32 crore and Rs 611.12 crore, respectively.
Similarly, Gold Mini contract for February slides Rs 1,788, or 3.51 percent, at Rs 49,130 on a business turnover of 54,646 lots.
Trading Strategy
Tapan Patel- Senior Analyst (Commodities), HDFC Securities
Gold prices witnessed sharp selling on Friday as dollar index rebounded above 90 mark as traders unwind short positions with a rise in treasury yields. However, we expect bullion prices to limit downside on stimulus push as the path for US President Joe Biden is clear after taking control over the senate.
We expect gold prices to trade down with COMEX gold resistance at $1,910, support at $1,860. MCX Gold February support lies at Rs 49,700 with resistance at Rs 50,400.
Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited
Technically, International gold breached the psychological levels of $1,900 and is sustaining below them. Support is placed at $1,875-1,860 levels and resistance is at $1,900-1,910 levels.
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