Gold prices soared Rs 597 to hit Rs 48,358 per 10 gram in the Mumbai retail market on a positive global trend after US Federal Reserve maintained a dovish tone, but the upside was capped by a firm rupee. The yellow metal was supported by weakness in the US dollar and increasing coronavirus cases.
The price of 10 gram, 22-carat gold in Mumbai was Rs 44,296 plus 3 percent GST, while 24-carat 10 gram stood at Rs 48,358 plus GST. The 18-carat gold is quoted at Rs 35,821 plus GST in the retail market.
The Federal Reserve kept monetary policy unchanged and maintained optimism about the US economy while reiterating that they were moving towards tapering of asset purchases.
The US dollar dropped below 92 mark at 91.94, down 0.40 percent against a basket of six rival currencies.
Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund remained unchanged for the second day at 1,025.64 tonnes. The ETF has a market value of $59.22 billion.
Spot gold surged by $19.20 to $1,826.32 an ounce at 12:35 GMT in London trading.
MCX Bulldesk jumped by 212 points or 1.46 percent, at 14,693 at 18:06. The index tracks the real-time performance of MCX Gold and MCX Silver futures.
“Gold price edged higher, as the latest insistence from Fed Governor Jerome Powell that rate increases aren't on the radar, put pressure on the dollar and support the safe haven asset. US central bank acknowledged the fact about eventual withdrawal of pandemic-era monetary policy support, although Powell mentioned that the US job market still had some ground to cover before it would be time to pull back,” said Navneet Damani, VP – Commodities Research at Motilal Oswal Financial Services.
“A group of negotiators in the US Senate said they have reached agreement on the major components of a $1.2 trillion bipartisan infrastructure deal, hence all updates regarding the same will be important to watch for. Today market participants will keep an eye on the US Q2 GDP and initial jobless claims data scheduled later in the day,” he added.
The broader range on COMEX could be $1804- 1832 and on the domestic front, prices could hover in the range of Rs 47,550- 48,000.
The gold/silver ratio currently stands at 71.23 to 1, which means 71.23 ounces of silver is required to buy an ounce of gold.
Silver prices increased by Rs 1,495 to Rs 67,881 per kg against its closing price on July 28.
In the futures market, the gold rate touched an intraday high of Rs 48,189 and an intraday low of Rs 47,690 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 rose Rs 563, or 1.18 percent, to Rs 48,140 per 10 gram in evening trade on a business turnover of 1,384 lots. The same for October soared Rs 507, or 1.06 percent, to Rs 48,221 on a business turnover of 12,207 lots.
The value of August and October’s contracts traded so far is Rs 2,150.42 crore and Rs 1,826.10 crore, respectively.
Similarly, Gold Mini contract for August gained Rs 553, or 1.16 percent at Rs 48,088 on a business turnover of 4,247 lots.
Trading Strategy
Tapan Patel- Senior Analyst (Commodities), HDFC Securities
We expect gold prices to trade up with COMEX spot gold resistance at $1833 and support at $1805 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, International Gold is trading with a positive bias near $1,820-1,825 levels and are sustaining above support of $1,810. On the domestic front, MCX August gold is trading with strong positive momentum, trailing above the support of 15-SMA of hourly chart placed at Rs 47,877. The price peaked over the psychological hurdle of Rs 48,000 after the European session and is likely to continue in the same trend if it sustains over support. The major resistance is at Rs 48,280.
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