Gold prices edged higher for the third day by Rs 299 to Rs 47,710 per 10 gram in the Mumbai retail market supported by an overnight rally in the international market but the upside was capped by strength in the rupee. The yellow metal traded with a positive bias above $1,800/oz on hopes that Federal Reserve might delay asset tapering amid surging coronavirus cases.
The price of 10 gram, 22-carat gold in Mumbai was Rs 43,702 plus 3 percent GST, while 24-carat 10 gram stood at Rs 47,710 plus GST. The 18-carat gold is quoted at Rs 35,783 plus GST in the retail market.
Data from IHS Markit showed US business activity growth slowed for a third straight month in August as capacity constraints, supply shortages and the rapidly spreading Delta variant weakened the momentum of the rebound from last year's pandemic-induced recession.
Investors now turn their attention toward Fed chief Jerome Powell’s speech at the Jackson Hole, Wyoming for further direction.
The economic calendar is fairly light for the day, although market participants will focus on the US core PCE and GDP data scheduled later this week.
Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, dropped by 4.95 tonnes to 1,006.66 tonnes, the lowest since April 2020. The ETF has a market value of $58.30 billion.
The US dollar index trade moderately higher at 93.00, up 0.04 percent against a basket of six rival currencies.
Spot gold slightly eased by $1.15 to $1,804.44 an ounce at 1211 GMT in London trading.
MCX Bulldesk jumped by 11 points or 0.08 percent at 14,258 at 17:43. The index tracks the real-time performance of MCX Gold and MCX Silver futures.
“Gold traded higher breaching the key $1,800 psychological level as a retreat in the dollar, weak US economic data and rising coronavirus cases pushed investors to bullion. US business activity growth slowed for a third straight month in August as supply shortages and the rapidly spreading Delta variant are showing their impact on the market. Investors are now focused on Fed Chair Jerome Powell’s speech at the annual Jackson Hole, Wyoming, symposium scheduled later this week, awaiting guidance on the US central bank’s taper plans,” said Navneet Damani, VP – Commodities Research at Motilal Oswal Financial Services.
The broader range on COMEX could be $1788-$1825 and on the domestic front, prices could hover in the range of Rs 47,360- 47,880.
“COMEX gold is trading flat near $1805/oz. Gold steadied as the US dollar index paused after yesterday’s decline. Supporting price is reduced expectations of Fed’s monetary tightening post comments from Dallas Fed President Robert Kaplan, mixed economic data from major economies, tensions relating to Afghanistan and persisting virus concerns. Weighing on price is continuing ETF outflows and recovery in equity markets. Gold's break above $1,800/oz shows positive momentum. However, gains may be limited if bulls fall in keeping it above $1800/oz,” said Ravindra Rao, CMT, EPAT, VP- Head Commodity Research at Kotak Securities.
The gold-silver ratio currently stands at 75.19 to 1, which means 75.19 ounces of silver is required to buy an ounce of gold.
Silver prices rose by Rs 745 to Rs 63,450 per kg against its closing price on August 23.
In the futures market, the gold rate touched an intraday high of Rs 47,667 and an intraday low of Rs 47,472 on the Multi-Commodity Exchange (MCX). For the October series, the yellow metal touched a low of Rs 45,662 and a high of Rs 50,040.
Gold futures for October delivery increased Rs 66, or 0.14 percent, to Rs 47,650 per 10 gram in evening trade on a business turnover of 11,891 lots. The same for December jumped Rs 19, or 0.04 percent, to Rs 47,762 on a business turnover of 2,352 lots.
The value of October and December’s contracts traded so far is Rs 1,213.20 crore and Rs 74.97 crore, respectively.
Similarly, Gold Mini contract for September climbed Rs 65, or 0.14 percent at Rs 47,576 on a business turnover of 10,237 lots.
Trading Strategy
Tapan Patel- Senior Analyst (Commodities), HDFC Securities
We expect gold prices to trade sideways to up with COMEX spot gold resistance at $1,820 and support at $1,780 per ounce. MCX Gold October support lies at Rs 47,200 and resistance at Rs 47,800 per 10 gram.
Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited
MCX Gold October is trading in sideways momentum alongside the support of 15-SMA of intraday chart placed at Rs 47,477. The price has inclined in the last session from the support low of Rs 47,179, made a high of Rs 47,667 which would be immediate resistance for today’s session.
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