Gold prices rise to Rs 49,290 per 10 gram, outlook bearish

Gold prices edged higher to settle at Rs 49,290 per 10 gram on December 11 as participants trimmed their long position as seen by the open interest. The precious metal ended the week with a marginal loss of 0.14 percent for the week.

The yellow metal traded in a narrow range during the week as the surge in coronavirus cases in the US and Europe has brought fears in the global market offsetting the optimism of the vaccine.

The market will now look at the Fed meeting next week, any fresh trigger from the US stimulus talks, US-China trade tensions and Brexit uncertainty for further cues.

In the retail market, the bullion metal settled at Rs 49,046 per gram on Friday down 0.55 percent on rupee depreciation and firm dollar. The premium charged by dealer over official domestic price fell to $2.5 per troy ounce this week from $3.5 last week as high prices dented retail appetite.

The rate of 10 gram 22-carat gold in Mumbai was Rs 44,926 plus 3 percent GST, while 24-carat 10 gram was Rs 49,046 plus GST. The 18-carat gold quoted at Rs 36,785 plus GST in the retail market.

The US dollar settled modestly higher at 90.97 or up 0.17 percent yesterday against a basket of six currencies, it gained 0.30 percent for the week.

Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund fell 3.79 tonnes to 1,182.70 tonnes.

MCX Bulldesk jumped 67 points, or 0.44 percent to settle at 15,225. The index tracks the real-time performance of MCX Gold and MCX Silver futures.

Sunand Subramaniam, Senior Research Associate at Choice Broking said, “Fundamentally for the coming month, we expect international gold futures to continue to trade mixed to bearish as there is a report of a further revival of global economic activities especially after the reports of third quarter GDP growth rate of various countries confirming that the global economy is heading towards the pre-COVID-19 situation.”

Moreover, gold prices could see correction as ETF investments in gold has shown a slowdown with recoveries in 10-year bond yields of the major economies such as US, China, European Union, Japan and the UK. Gold prices could also further decline with decent development in the global equity markets as manufacturing and service industries are getting back into full capacity with further vaccine developments and rising demand from China, he said.

The gold/silver ratio currently stands at 78.81 to 1, which means the amount of silver required to buy one ounce of gold.

Silver prices fell Rs 368 to Rs 62,232 per kg from its closing on December 11.

We expect international gold futures to continue to trade mixed to bearish as there is a report of a further revival of global economic activities especially after the reports of third quarter GDP growth rate of various countries confirming that the global economy is heading towards the pre

-COVID-19 situation – Sunand Subramaniam

Gold futures for February delivery soared Rs 213, or 0.43 percent, to settle at Rs 49,290 per 10 gram with a business turnover of 11,492 lots. The same for April edged higher Rs 177, or 0.36 percent, at Rs 49,330 on a business turnover of 425 lots.

The value of the February and April’s contracts traded on December 11 was Rs 4,761.10 crore and Rs 209.48 crore, respectively.

Similarly, Gold Mini contract for January climbed Rs 209, or 0.43 percent to close at Rs 49,290 on a business turnover of 11,203 lots.

Subramaniam said on the daily chart, that MCX Gold February has closed below its “Bollinger Band Mean” which indicates weakness in the counter. Gold has been trading in a “Rectangle formation” suggesting choppy movement. The price has sustained below its “Ichimoku Cloud” signalling bearishness in the counter. The momentum indicator Relative Strength Index (RSI) has remained below its 50 levels suggesting negative momentum.

We can expect a sideways to bearish movement in MCX Gold February futures for the month ahead with price finding resistance around Rs 50,180 levels, while on the lower end it may test the support at Rs 47,700 levels, he said.

Spot gold settled with a slightly up $2.88 at $1,839.60 an ounce on Friday in London trading.

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