Gold prices edged higher for the third straight day by Rs 269 to Rs 48,424 per 10 gram in the Mumbai retail market as US Federal Reserve maintain an accommodative stance on monetary policy. The yellow metal price was supported by a surge in fresh COVID cases due to the more virulent Delta variant.
The price of 10 gram, 22-carat gold in Mumbai was Rs 44,356 plus 3 percent GST, while 24-carat 10 gram stood at Rs 48,424 plus GST. The 18-carat gold quoted at Rs 36,318 plus GST in the retail market.
Fed Chairman Jerome Powell said in a prepared remark before a congressional hearing that the US job market is still way off from the progress the Fed wants to see before reducing its support for the economy, while current high inflation will ease in the coming months.
Investors also cheered European Central Bank official comments yesterday that the central bank would not tighten too early.
Market participants today, will keep an eye on the US industrial production, weekly jobless claims data.
The US dollar traded firm at 92.54, up 0.14 percent against a basket of six rival currencies.
Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund fell by 2.91 tonnes to 1,034.37 tonnes. The ETF has a market value of $60.62 billion.
Spot gold dipped $1.37 to $1,825.99 an ounce at 1206 GMT in London trading.
MCX Bulldesk rose 24 points or 0.16 percent, at 14,865 at 17:37. The index tracks the real-time performance of MCX Gold and MCX Silver futures.
“Gold prices edged higher, hovering near a four-week high after US Federal Reserve Chair J Powell signalled powerful support for economic recovery and boosted the metal’s appeal as an inflation hedge,” said Navneet Damani, VP – Commodities Research at Motilal Oswal Financial Services.
"We might hear the tapering talks in the next policy meet as yesterday's testimony did not reflect much regarding the same. Increased concerns regarding the Delta variant coronavirus is also supporting the metal prices. The focus will also be on the second day of Governor Powell's testimony," he said.
The broader range on COMEX could be between $1,810 and Rs 1,855 and on the domestic front, prices could hover in the range of Rs 48,050- 48,750.
“COMEX gold extended the morning gains to trade higher near $1833/oz. The general bias may be on the upside provided the US dollar stays lower,” said Ravindra Rao, CMT, EPAT, VP- Head Commodity Research at Kotak Securities.
The gold/silver ratio currently stands at 69.94 to 1, which means 69.94 ounces of silver is required to buy an ounce of gold.
Silver prices surged by Rs 113 to Rs 69,233 per kg against its closing price on July 14.
In the futures market, the gold rate touched an intraday high of Rs 48,501 and an intraday low of Rs 48,236 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 gained Rs 20, or 0.04 percent, to Rs 48,319 per 10 gram in evening trade on a business turnover of 8,131 lots. The same for October soared Rs 30, or 0.06 percent, to Rs 48,608 on a business turnover of 7,213 lots.
The value of August and October’s contracts traded so far is Rs 1,884.05 crore and Rs 338.74 crore, respectively.
Similarly, Gold Mini contract for August jumped by Rs 42, or 0.09 percent at Rs 48,307 on a business turnover of 14,313 lots.
Trading Strategy
Tapan Patel- Senior Analyst (Commodities), HDFC Securities
Gold prices extended gains hovering above $1,830 supported by weaker dollar and fall in US treasury yields. US 10-year treasury yields fell to 1.32 percent boosting buying in the yellow metal.
We expect gold prices to trade sideways to up for the day with COMEX gold support at $1,810 and resistance at $1,840 per ounce. MCX Gold August support lies at Rs 48,100 and resistance at Rs 48,800 per 10 gram.
Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited
Technically, International Gold is trading with gains above $1,820 levels after a bullish breakout during the previous session. We may expect a marginal decline after which a rally could be witnessed. On the domestic front, we may expect a decline during the evening hours where Rs 48,300 levels could be tested. This dip could act as buying opportunity for the investors.
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