Gold prices slump by Rs 461 to Rs 47,863/10 gm, gains 0.58% in the week; silver falls

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Gold prices slumped by Rs 461 to Rs 47,863 per 10 gram in the Mumbai retail market on a stronger rupee amid improvement in risk appetite. The precious metal gained Rs 276 or 0.58 percent during the week in the domestic market.

The price of 10 gram 22-carat gold in Mumbai was Rs 43,843 plus 3 percent GST, while 24-carat 10 gram stood at Rs 47,863 plus GST. The 18-carat gold quoted at Rs 35,897 plus GST in the retail market.

U.S jobless claims surprisingly rose slightly last week to 373,000, above a forecast 350,000 applications in a poll suggesting substantial progress needs to be made for the Fed to raise interest rates and also lent support to gold. Also, the rising COVID cases caused by the Delta variant capped the bullion downside limited.

The US dollar traded lower at 92.27, down 0.15 percent against a basket of six rival currencies. 

Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, dropped by 0.3 tonnes to 1,040.19 tonnes. The ETF has a market value of $60.44 billion.

Spot gold slightly declined by $2.35 to $1,800.43 an ounce at 1218 GMT in London trading.

MCX Bulldesk decreased 24 points or 0.16 percent, at 14,666 at 17:49. The index tracks the real-time performance of MCX Gold and MCX Silver futures.

“Gold prices are set for the third straight weekly gain, amidst fall in U.S. yields and a slight pullback in the dollar. The dollar index retreated from a three-month peak against its rivals. Whereas, U.S. 10-year Treasury yields languished near more than four-month low. Dow Jones saw a fall of almost 500 points, this fall in equities also supported the metal prices. Data on Thursday showed the number of Americans filing new claims for unemployment benefits rose unexpectedly last week, an indication that the labour market recovery from the COVID-19 pandemic continues to be choppy,” said Navneet Damani, VP – Commodities Research at Motilal Oswal Financial Services.

He said that the sudden rise in cases of COVID-19 and its variants is also causing a stir in the market. The G20 Finance ministers and central bankers governors meet in Italy today and tomorrow for their first in-person summit since Feb’20, hence any updates regarding the same will be important to watch for.

The broader range on COMEX could be between $1,792- $1,820 and on the domestic front prices could hover in the range of Rs 47,550 - Rs 48,150

“COMEX gold trades steady near $1,804/oz. Gold trades higher supported by safe haven buying amid growth and virus concerns, weaker US dollar and lower bond yields. However, weighing on price is Fed’s tightening expectations and continuing ETF outflows. Gold may remain choppy near $1800/oz as safe haven buying will be countered by Fed's rate hike expectations,” Ravindra Rao, CMT, EPAT, VP- Head Commodity Research at Kotak Securities.

The gold/silver ratio currently stands at 69.57 to 1, which means 69.57 ounces of silver is required to buy an ounce of gold.

Silver prices fell by Rs 253 to Rs 68,789 per kg against its closing price on July 8. The white metal fell for the four straight day during the week.

In the futures market, the gold rate touched an intraday high of Rs 47,890 and an intraday low of Rs 47,625 on the Multi-Commodity Exchange (MCX). For the August series, the yellow metal touched a low of Rs 44,501 and a high of Rs 49,721.

Gold futures for August delivery slipped Rs 9, or 0.02 percent, to Rs 47,712 per 10 gram in evening trade on a business turnover of 9,213 lots. The same for October eased Rs 76, or 0.16 percent, to Rs 47,960 on a business turnover of 5,778 lots.

The value of August and October’s contracts traded so far is Rs 1,794.53 crore and Rs 248.89 crore, respectively.

Similarly, Gold Mini contract for August down by Rs 13, or 0.03 percent at Rs 47,772 on a business turnover of 13,901 lots.

Trading Strategy

Tapan Patel- Senior Analyst (Commodities), HDFC Securities

Gold prices kept firm with a fall in US treasury yields. The 10 year US Treasury yields fell to the lowest level since February dipping below 1.25%. The rising worries over the fast-spreading Delta variant supported buying in precious metals with a fall in equity indices. 

We expect gold prices to trade sideways to up for the day with COMEX gold support at $1,790 and resistance at $1,820 per ounce. MCX Gold August support lies at Rs 47,500 and resistance at Rs 48,100 per 10 gram.

Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited

Technically, International Gold is trading with marginal changes above $1,800 level after a bullish breakout earlier this week. We may expect a rise from here in the coming sessions. On the domestic front, MCX Gold August gave a gap up opening but is trading with negative bias. We may expect a rise during the evening hours where Rs 48,100-48,200 levels could be tested.

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