Gold prices continued uptrend for the eighth consecutive day on October 14, up by Rs 638 to touch Rs 48,125 per 10 gram in the Mumbai bullion market a day before Dussehra, tracking sharp gains in the international market and weak dollar. The precious metal edged closer to $1,800/oz on rising inflation- boosted safe-haven appeal.
The bullion soared Rs 1,145 or 2.44 percent in this holiday-shortened week in the domestic market.
The price of 10 gram, 22-carat gold in Mumbai was Rs 44,083 plus 3 percent GST, while 24-carat 10 gram stood at Rs 48,125 plus GST. The 18-carat gold is quoted at Rs 36,094 plus GST in the retail market.
The FOMC minutes from the Fed's September policy meeting signalled that the central bankers could start tapering their support for the economy in mid-November. The minutes also showed that the members remained divided over how much of a threat high inflation poses and how soon they may need to raise interest rates in response.
However, the downside remained capped as the dollar and the 10-year benchmark remained under pressure following hotter-than-expected US inflation data.
Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, dropped by 2.3 tonnes to 982.72 tonnes, the lowest level in 2021. The ETF has a market value of $56.41 billion.
The US dollar index trades lower at 93.86, down 0.23 percent against a basket of six rival currencies. While the 10-year Treasury eased 1 basis point to 1.535 percent.
Spot gold rose by $4.35 to $1,797.38 an ounce at 1230 GMT in London trading.
MCX Bulldek increased by 76 points or 0.53 percent to 14,334 at 18:00. The index tracks the real-time performance of MCX Gold and MCX Silver futures.
“Gold jumped by 2 percent, to approach the key $1,800 level in response to weeks of surging oil and other commodity prices. The rally was triggered by the latest US CPI data that proved to be another affirmation of inflation in the US. After weeks of being stuck in the mid-to-lower $1,700 levels, the move helped validate to some extent the “safe-haven” and ‘inflation hedge” labels typically applied to gold prices,” said Navneet Damani, VP – Commodities Research at Motilal Oswal Financial Services.
The Fed's meeting minutes showed that the central bank could start tapering from mid-November, although few officials showed concerns regarding the rising inflation. Market participants will focus on the US weekly jobless claims data, he added.
The broader range on COMEX could be $1770-1800 and on the domestic front, prices could hover in the range of Rs 47,500- 48,150.
The gold-silver ratio currently stands at 76.03 to 1, which means 76.03 ounces of silver is required to buy an ounce of gold.
Silver prices climbed by Rs 1,154 to Rs 63,290 per kg against its closing price on October 13.
In the futures market, the gold rate touched an intraday high of Rs 48,100 and an intraday low of Rs 47,783 on the Multi-Commodity Exchange (MCX). For the December series, the yellow metal touched a low of Rs 45,705 and a high of Rs 48,899.
Gold futures for December delivery surged by Rs 163, or 0.34 percent, at Rs 48,079 per 10 gram in evening trade on a business turnover of 13,595 lots. The same for February gained by Rs 161, or 0.33 percent, to Rs 48,240 on a business turnover of 1,631 lots.
The value of December and February contracts traded so far is Rs 1,569.16 crore and Rs 118.40 crore, respectively.
Similarly, the Gold Mini contract for November edged higher Rs 138, or 0.29 percent at Rs 47,891 on a business turnover of 13,566 lots.
Trading Strategy
Tapan Patel- Senior Analyst (Commodities), HDFC securities
We expect gold prices to trade sideways to up with COMEX spot gold resistance at $1810 and support at $1780 per ounce. MCX Gold December 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, International Gold is trading with marginal bullish bias near $1,800 levels. On the domestic front, MCX Gold resumed on a negative note at Rs 47,808 but is trading with positive bias. In the previous session, prices rallied more than 600 points. We may expect prices to rise in the coming sessions and trade above Rs 48,200 levels.
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