Gold prices slide to Rs 44,332/10 gm on dollar, bond yields uptick; Silver crashes Rs 529 a kg

gold silver metals

Gold prices plummeted Rs 348 to Rs 44,332 per 10 gram in the Mumbai retail market on broader selloff across assets class, firm dollar and rising bond yields. The yellow metal was also weighed down by a firm rupee and continued ETF outflow.

The bullion metal fell Rs 184, or 0.41 percent in the domestic market this week.

The rate of 10 gram 22-carat gold in Mumbai was Rs 40,608 plus 3 percent GST, while 24-carat 10 gram was Rs 44,332 plus GST. The 18-carat gold quoted at Rs 33,249 plus GST in the retail market.

The surging bond yields and inflationary pressure weighed the market sentiments on the weekend trading session. Although, the optimism over US stimulus and massive virus inoculation measures still broadly continue to support sentiments.

US Labour Department reported the number of Americans filing jobless claims fell by 42,000 to a seasonally adjusted 712,000 for the week ended March 6, the lowest since early November.

The US dollar trades higher at 91.92, or up 0.55 percent against a basket of six rival currencies.

The benchmark 10-year US T-bond yield climbed above 1.6 percent, up 8 basis point putting pressure on bullion metal.

Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund decreased by 5 tonnes to 1,055.27 tonnes.

Spot gold fell $4.03 to $1,711.82 an ounce at 1208 GMT in London trading.

MCX Bulldesk declined 181 points or 1.26 percent, at 14,129 at 17:28. The index tracks the real-time performance of MCX Gold and MCX Silver futures.

“COMEX gold erased most of the gains to trade lower near $1,701/oz. Gold has eased back from recent highs as upbeat US economic data and approval of the US stimulus package brought a halt to recent correction in US dollar and bond yields. ETF outflows also show weaker investor interest. Gold may continue to sway along with US dollar however general bias may be on the upside on US stimulus deal”, said Ravindra Rao, VP- Head Commodity Research at Kotak Securities.

The gold/silver ratio currently stands at 67.33 to 1, which means the number of silver ounces required to buy one ounce of gold.

Silver prices dropped by Rs 529 to Rs 65,841 per kg from its closing on March 10. 

In the futures market, the gold rate touched an intraday high of Rs 44,772 and an intraday low of Rs 44,304 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 decreased by Rs 502, or 1.12 percent, at Rs 44,377 per 10 gram in evening trade on a business turnover of 11,119 lots. The same for June slipped Rs 438, or 0.97 percent, at Rs 44,750 on a business turnover of 6,546 lots.

The value of the April and June’s contracts traded so far is Rs 2,290.38 crore and Rs 186.74 crore, respectively.

Similarly, Gold Mini contract for April slid by Rs 466, or 1.04 percent at Rs 44,410 on a business turnover of 26,510 lots.

Trading Strategy

Tapan Patel, Senior Analyst (Commodities), HDFC Securities

Gold prices traded lower on Friday with dollar recovery paring some of the weekly gains. The yellow metal is set to report a best weekly gain in the last seven weeks. Gold prices witnessed recovery during the week on soften bond yields and a weaker dollar. The higher inflation fears drew the investors out of dollar to precious metals. The fall in European equities has put some pressure on gold prices with a stronger dollar.

We expect gold prices to trade sideways to down for the day with COMEX spot gold support lies at $1,690 and resistance at $1,730. MCX Gold April support lies at Rs 44,200 and resistance lies at Rs 44,800.

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