Gold prices soared by Rs 288 to Rs 46,682 per 10 gram in the Mumbai bullion market on rupee weakness and improving consumer demand. However, weak global cues, tapering fears and rising Treasury yield and dollar index capped the upside.
The price of 10 gram, 22-carat gold in Mumbai was Rs 42,761 plus 3 percent GST, while 24-carat 10 gram stood at Rs 46,682 plus GST. The 18-carat gold is quoted at Rs 35,012 plus GST in the retail market.
Jewellers told Moneycontrol that they are seeing sales picking up ahead of the festive and wedding season as customers want to lock in their purchases at a lower level after the recent correction in prices.
India's gold imports in September soared 658 percent from last year's lower base as a correction in local prices to the lowest level in nearly six months prompted jewellers to step up purchases for the upcoming festive season, Reuters reported.
Investors now await the US September non-farm payrolls report due on Friday, which is expected to show a continued improvement in the labour market, which could influence the Federal Reserve's timeline for tapering economic support.
Also supporting the prices were ongoing uncertainty over raising the debt ceiling, with President Joe Biden warning that the government is at risk of breaching the legal limit and new defaults from China might attract some safe-haven purchases.
Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, remained unchanged at 986.54 tonnes. The ETF has a market value of $55.62 billion.
The US dollar index rose to 93.93, up 0.17 percent against a basket of six rival currencies.
Spot gold slumped by $12.97 to $1,756.80 an ounce at 12:55 GMT in London trading.
MCX Bulldesk decreased by 41 points or 0.29 percent at 13,885 at 18:25. The index tracks the real-time performance of MCX Gold and MCX Silver futures.
“Gold prices once again hit a one week peak as updates regarding the U.S -China trade deal was in the highlights, supporting the metal prices. Although, tapering fears and volatility in Dollar and Yields are capping some gains for the metal. Chinese officials mentioned that talks with the U.S. regarding phase one deal could be expected soon although, U.S. won't seek phase 2 trade deal talks. China also blamed the US for increased tensions over Taiwan and vowed to “smash” any separatist plots,” said Navneet Damani, VP – Commodities Research at Motilal Oswal Financial Services.
“Apart from comments of Fed officials, in this important week, market participants will also keep their eyes on Services PMI data expected from major economies and U.S. non-farm payroll data which could further trigger the volatility”, he added.
The broader range on COMEX could be between $1735- $1775 and on the domestic front, prices could hover in the range of Rs 46,520- Rs 46,960.
The gold-silver ratio currently stands at 76.64 to 1, which means 76.64 ounces of silver is required to buy an ounce of gold.
Silver prices surged by Rs 908 to Rs 60,905 per kg against its closing price on October 4.
In the futures market, the gold rate touched an intraday high of Rs 46,807 and an intraday low of Rs 46,600 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 dropped Rs 231, or 0.49 percent, to Rs 46,656 per 10 gram in evening trade on a business turnover of 13,543 lots. The same for February slipped by Rs 233, or 0.49 percent, to Rs 46,844 on a business turnover of 577 lots.
The value of December and February’s contracts traded so far is Rs 1,460.50 crore and Rs 17.34 crore, respectively.
Similarly, the Gold Mini contract for November slides Rs 189, or 0.40 percent at Rs 46,576 on a business turnover of 16,068 lots.
Trading Strategy
Tapan Patel- Senior Analyst (Commodities), HDFC Securities
Gold prices pared previous gains on the stronger dollar for the day. The dollar index was up by 0.14% in the noon session lowering demand for safe haven. Earlier, gold prices gained on inflation worries with power shortage and rising energy costs.
We expect gold prices to trade sideways to down with COMEX spot gold resistance at $1,770 and support at $1,740 per ounce. MCX Gold December support lies at Rs 46,500 and resistance at Rs 46,900 per 10 gram.
Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited
Technically, International Gold is trading with a negative note near $1,760. On the domestic front, we may witness a marginal sideways and negative momentum till the US market opens in the evening, after which volatility could be expected and price may rise.
Anand Rathi Investment Services
MCX Gold December futures are expected to trade in the range of Rs 46,600-Rs 47,100 per 10 gram for the day.
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