Gold prices surged by Rs 397 to Rs 49,659 per 10 gram in the Mumbai retail market on dollar depreciation and decline in the equity market, but the upside was capped by a firm rupee. The yellow metal rose on surging coronavirus cases globally and expectations that US President Joe Biden’s administration would increase stimulus measures to revive the economy.
The rate of 10 gram 22-carat gold in Mumbai was Rs 45,488 plus 3 percent GST, while 24-carat 10 gram was Rs 49,659 plus GST. The 18-carat gold quoted at Rs 37,244 plus GST in the retail market.
The global coronavirus cases have surpassed 96.9 million while the fatality has risen above 2.07 million, according to John Hopkins University data. German Chancellor Angela Merkel defended a decision to extend lockdown in the country by two weeks until mid-February stating that it was essential to slow the new variant of the coronavirus as Germany suffered record daily deaths.
The US surpassed 4 lakh deaths due to the virus and on the other side, the World Health Organization is planning to approve several COVID vaccines from western and Chinese manufacturers in the coming months which could put pressure on gold.
The US dollar trades lower at 90.17, or 0.32 percent against a basket of six currencies. The greenback has been weighed down by reduced safe-haven buying, mixed US economic data and increased hopes of further stimulus measures in the US.
Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund was unchanged at 1,174.12 tonnes.
Spot gold was marginally down by $0.90 to $1,871.03 an ounce at 1203 GMT in London trading.
MCX Bulldesk was up 42 points, or 0.27 percent, at 15,494 at 15:34. 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 edge higher on stimulus plans anticipated from the Joe Biden administration and a broad commodities rally spurred by the inauguration of the 46th US president. Biden signed a string of executive orders, shortly after being sworn in on Wednesday to jump-start the government's response to the coronavirus pandemic. Also, volatility in dollar and yields attracted investors towards the bullion.”
The broader trend on COMEX could be in the range of $1805- 1880 and on domestic front prices could hover in the range of Rs 49,300- 50,050.”
The gold/silver ratio currently stands at 73.94 to 1, which means the number of silver ounces required to buy one ounce of gold.
Silver prices climbed by Rs 1,172 to Rs 67,160 per kg from its closing on January 20.
In the futures market, the gold rate touched an intraday high of Rs 49,765 and an intraday low of Rs 49,555 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 gained Rs 76, or 0.15 percent, at Rs 49,610 per 10 gram in evening trade on a business turnover of 5,451 lots. The same for April jumped Rs 55, or 0.11 percent, at Rs 49,696 on a business turnover of 10,083 lots.
The value of the February and April’s contracts traded so far is Rs 2,285.43 crore and Rs 479.18 crore, respectively.
Similarly, Gold Mini contract for February edged higher Rs 18, or 0.04 percent at Rs 49,548 on a business turnover of 14,875 lots.
Trading Strategy
Ravindra Rao, VP- Head Commodity Research at Kotak Securities
“COMEX gold trades marginally higher near $1870/oz supported by weakness in the US dollar, increased US stimulus expectations, rising virus cases and increased US-China tensions. However, weighing on price is vaccine progress and weaker investor interest as is evident from ETF flows. Gold's break past the $1860/oz may lead to extended gains. However, the momentum may sustain only if there is progress on US stimulus talks.”
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