Gold prices increased by Rs 125 to Rs 44,644 per 10 gram in the Mumbai retail market on positive global cues and a weaker dollar, but the gain was capped by a stronger rupee. The precious metal advanced as US bond yields take a breather, but remain in a tight trading range.
The rate of 10 gram 22-carat gold in Mumbai was Rs 40,894 plus 3 percent GST, while 24-carat 10 gram was Rs 44,644 plus GST. The 18-carat gold quoted at Rs 33,483 plus GST in the retail market.
The US Senate approved the $1.9 trillion stimulus package which will go to the House of Representatives for a vote before going to the President for his approval.
The US dollar traded weaker at 91.98, or down 0.38 percent, against a basket of six rival currencies.
The 10-year US T-bond yield cooled off to 1.52 percent after touching 1.6 percent level on March 8.
Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund decreased by 5.8 tonnes to 1,063.44 tonnes.
Spot gold surged $26.02 to $1,709.69 an ounce at 1157 GMT in London trading.
MCX Bulldesk climbed 148 points, or 1.05 percent, at 14,210 at 17:28. The index tracks the real-time performance of MCX Gold and MCX Silver futures.
Navneet Damani, Vice President, Motilal Oswal said, “Gold price rose today as a pullback in the US Treasury Yields added some lustre to the metal after it hit a 9-month low in the previous session. US Treasury Secretary Janet Yellen said President Joe Biden’s $1.9 trillion coronavirus aid package will provide enough resources to fuel a “very strong” US economic recovery, hence capping some gains for the metal.”
“COMEX gold recovered from yesterday’s losses to trade higher near $1,700/oz amid weakness in US Dollar. Earlier gold had reached the June 2020 lows weighed down by firmness in the US dollar, higher bond yields and continuing ETF outflows. Apart from a weak US Dollar support is seen from progress on US stimulus and increased inflation expectations and geopolitical tensions. Although gold may remain under pressure unless there is a major correction in US dollar index or bond yields a pullback can’t be ruled out," said Ravindra Rao, VP- Head Commodity Research at Kotak Securities.
The gold/silver ratio currently stands at 67.34 to 1, which means the number of silver ounces required to buy one ounce of gold.
Silver prices soared by Rs 814 to Rs 66,287 per kg from its closing on March 8.
In the futures market, the gold rate touched an intraday high of Rs 44,697 and an intraday low of Rs 44,263 on the Multi-Commodity Exchange (MCX). For the April series, the yellow metal touched a low of Rs 44,150 and a high of Rs 51,931.
Gold futures for April delivery edged higher by Rs 409, or 0.92 percent, at Rs 44,627 per 10 gram in evening trade on a business turnover of 11,483 lots. The same for June gained Rs 470, or 1.06 percent, at Rs 44,901 on a business turnover of 5,580 lots.
The value of the April and June’s contracts traded so far is Rs 2,681.29 crore and Rs 206.98 crore, respectively.
Similarly, Gold Mini contract for April surged Rs 364, or 0.82 percent, at Rs 44,597 on a business turnover of 27,144 lots.
Trading Strategy
Tapan Patel, Senior Analyst (Commodities), HDFC Securities
Gold prices traded firm supported by a weaker dollar and US stimulus progress. The house may pass the $1.9 trillion stimulus package today when it appears for voting. The yellow metal capped upside due to firm US bond yields.
We expect gold prices to trade sideways to up for the day with COMEX spot gold support lies at $1680 and resistance at $1710. MCX Gold April support lies at Rs 44,100 and resistance lies at Rs 44,700.
Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited
MCX Gold is moving in a sideways and bullish trend. Technically, MCX Gold could remain within Rs 44,150-44,645 in today’s session. We may expect the price to test resistance level in the range of Rs 44,500-44,600.
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