Gold price fell for the second straight day on February 18. The yellow metal shed Rs 205 to Rs 46,439 per 10 gram in the Mumbai retail market on the firm rupee and subdued global cues. It was volatile in a narrow price band with the downside capped by a decline in US Treasury yield and weakness in the dollar.
The rate of 10 gram 22-carat gold in Mumbai was Rs 42,538 plus 3 percent GST, while 24-carat 10 gram was Rs 46,439 plus GST. The 18-carat gold quoted at Rs 34,829 plus GST in the retail market.
US retail sales rebounded sharply in January and manufacturing activity rose, while US producers prices increased by the most since 2009, suggesting inflation was starting to move up slowly.
The general risk sentiment is upbeat with economic readings showing some improvement, slowdown in new virus cases, progress on vaccine front, expectations of additional US stimulus and loose monetary policy stance from major central banks. The Chinese markets reopened after a week-long Lunar New Year holidays.
Market participants will keep an eye on the housing numbers and weekly jobless claims expected from the US.
The US dollar inched lower to 90.70, or 0.27 percent against a basket of six currencies.
Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund fell by 3.79 tonnes to 1,132.89 tonnes on increased ETF outflow.
Spot gold was up $4.62 to $1,781.08 an ounce at 1229 GMT in London trading.
MCX Bulldesk edged lower 15 points or 0.10 percent, at 14,790 at 18:00. The index tracks the real-time performance of MCX Gold and MCX Silver futures.
Navneet Damani, Vice President, Motilal Oswal said, “Gold prices showed some recovery from a more than two-month low hit in the earlier session as US Treasury yields retreated, although a stronger dollar kept bullion's gains in check. Benchmark 10-year Treasury yields retreated from the near one-year peak. Gold prices also got some support after Fed members continued to back loose monetary policy. US President Joe Biden told 10 top union leaders that his $1.9 trillion coronavirus relief plan and a separate measure to modernize US infrastructure would boost the US economy and create millions of jobs."
The broader range on COMEX could be between $1765- 1810 and on the domestic front, prices could hover in the range of Rs 46,150- 46,800.
“COMEX gold traded higher near $1786/oz amid some retreat in US dollar index. The US dollar index today fell to 90.70 after testing a high near 91 in yesterday’s session. The US bond yields also retreated from 1-year high while FOMC minutes showed that the central bank may keep monetary policy accommodative. However, continuing ETF outflows is a concern as it indicates the reduced safe-haven status of gold. Gold is seeing some recovery after recent sell-off however the momentum may remain weak unless price rescales $1800/oz or there is a sharp correction in the US dollar”, Ravindra Rao, VP- Head Commodity Research at Kotak Securities.
The gold/silver ratio currently stands at 67.59 to 1, which means the number of silver ounces required to buy one ounce of gold.
Silver prices soared Rs 272 to Rs 68,700 per kg from its closing on February 17.
In the futures market, the gold rate touched an intraday high of Rs 46,498 and an intraday low of Rs 46,228 on the Multi-Commodity Exchange (MCX). For the April series, the yellow metal touched a low of Rs 46,162 and a high of Rs 51,931.
Gold futures for April delivery gained Rs 33, or 0.07 percent, at Rs 46,270 per 10 gram in evening trade on a business turnover of 13,728 lots. The same for June jumped Rs 36, or 0.08 percent, at Rs 46,424 on a business turnover of 1,937 lots.
The value of the April and June’s contracts traded so far is Rs 2,414.26 crore and Rs 43.28 crore, respectively.
Similarly, Gold Mini contract for March rose Rs 69, or 0.15 percent at Rs 46,203 on a business turnover of 21,540 lots.
Trading Strategy
Tapan Patel, Senior Analyst (Commodities), HDFC Securities
Gold prices halted five-day slide on Thursday on mixed global cues with profit-taking in equity indices. Precious metals traded under pressure with a rise in bond yields and a stronger dollar. The risk-on sentiments drove investors out of yellow metal after positive US retail sales data.
We expect gold prices to trade sideways to up with COMEX spot gold support lies at $1760 and resistance at $1800. MCX Gold April support lies at Rs 46,000 and resistance lies at Rs 46,700.
Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited
International Gold is bouncing from the major support levels of $1,775-1,765. Prices are sustaining below $1,800 levels and bears are likely to dominate below the same. On the MCX, the price has major support at Rs 46,000 levels when breached with heavy volumes may lead to a heavy decline in the upcoming sessions.
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