Gold prices rise for fourth straight day on risk-off sentiments; silver jumps

Gold prices rose for the fourth consecutive day by Rs 414 to touch Rs 47,419 per 10 gram in the Mumbai bullion market on rupee depreciation and weaker equity market. The yellow metal gained after the US Federal Reserve kept the rate unchanged and the bleak growth forecast of economy boosted safe-haven appeal.

The US FED chairman Jerome Powell reassured to take every possible step to support economic recovery.

The rate of 10 gram 22-carat gold in Mumbai was Rs 43,436 plus 3 percent GST, while 24-carat 10 gram was Rs 47,419 plus GST. The 18-carat gold quoted at Rs 35,564 plus GST in the retail market.

Navneet Damani, Vice President, Motilal Oswal, said the US central bank repeated its promise of continued extraordinary support, estimating the US economy to shrink by 6.5 percent in 2020 and the unemployment rate to be at 9.3 percent by year-end. Fed officials also flagged the need to keep the key interest rate near zero through at least 2022.

White House Economic Adviser Larry Kudlow said the US economy appears to have hit a turning point after rapidly plunging into a recession due to the coronavirus pandemic about three months ago. SPDR holdings rose 0.4 percent to 1,129.50 tonnes. The broader trend on COMEX could be in the range of $1720-1750 and on the domestic front prices could hover in the range of Rs 46,800-47,550.

Ravindra Rao, VP-Head Commodity Research at Kotak Securities said COMEX gold traded higher by more than 1 percent above $1740/oz on weaker risk sentiment and weaker US dollar. Weaker risk sentiment is also evident from losses in equity markets. European equity markets are down over 2 percent while DJIA futures are trading lower by nearly 500 points.

The US dollar index trades weaker near 96.08 on Fed’s dovish stance but holds above 3-month low tested on June 10 as weaker equity markets have increased safe-haven appeal.

The gold/silver ratio currently stands at 97.80 to 1, which means the amount of silver required to buy one ounce of gold.

Silver prices jumped Rs 665 to Rs 48,485 per kg from its closing on June 10.

In the futures market, the gold rate touched an intraday high of Rs 47,335 and an intraday low of Rs 46,750 on the Multi-Commodity Exchange (MCX). For the August series, the yellow metal touched a low of Rs 39,200 and a high of Rs 48,190.

Gold futures for August delivery gained Rs 350, or 0.75 percent, at Rs 46,976 per 10 gram in evening trade on a business turnover of 14,221 lots. The same for October delivery rose Rs 309, or 0.66 percent, at Rs 47,120 on a business turnover of 5,486 lots.

The value of the August and October contracts traded so far is Rs 3,277.77 crore and Rs 44.95 crore, respectively.

Similarly, Gold Mini contract for July was up Rs 346, or 0.74 percent at Rs 46,975 on a business turnover of 10,140 lots.

MCX Gold has intraday support at Rs 46,915-46,740 whereas resistance is at Rs 47,200-47,400, according to Motilal Oswal.

The broking firm said spot gold has support at $1,724-1,718 whereas resistance is at $1,738-1,743 levels.

At 11:54 pm (GMT), spot gold slipped $10.62 at $1,727.72 an ounce in London trading.

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