Gold prices on September 15 gained Rs 238 to reach Rs 47,255 per 10 gram in the Mumbai bullion market snapping a four-day losing streak on dollar downtick and rising coronavirus cases in China boosted safe-haven appeal. The lower-than-expected US consumer inflation supported the yellow metal on the prospect of Fed delaying bond tapering.
The price of 10 gram, 22-carat gold in Mumbai was Rs 43,286 plus 3 percent GST, while 24-carat 10 gram stood at Rs 47,255 plus GST. The 18-carat gold is quoted at Rs 35,441 plus GST in the retail market.
The precious prices were supported by rising geopolitical tension, persisting COVID-19 and China’s regulatory crackdown on big technology firms.
Earlier in the day North Korea and South Korea tested ballistic missiles in a display of military might amid an impasse over talks aimed at dismantling Pyongyang’s nuclear and ballistic missile programmes in return for US sanctions relief.
Investors will keep an eye on the industrial production data expected from major economies.
Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund were unchanged at 1,000.21 tonnes. The ETF has a market value of $57.64 billion.
The dollar index, which measures the greenback's strength against a basket of six currencies, was trading 0.17 percent down at 92.45.
Spot gold modestly lowered by $1.77 to $1,802.85 an ounce at 1207 GMT in London trading.
MCX Bulldesk decreased by 26 points or 0.18 percent at 14,154 at 17:37. The index tracks the real-time performance of MCX Gold and MCX Silver futures.
“Gold continues to hover around $1,800 after rising to one- week high in the previous session, as the dollar retreated after lower-than-expected US inflation data was reported leading to uncertainty regarding Fed's early tapering actions. The US core CPI edged up 0.1 percent in August, missing expectations of 0.3 percent, and weighing on the US dollar,” said Navneet Damani, VP – Commodities Research at Motilal Oswal Financial Services.
“The data has raised some concerns regarding Fed's tapering timeline which was mentioned by Fed officials till now, as lower inflation defeats the primary objective of tapering. The Fed will hold a two-day monetary policy meeting next week. Worries regarding the spread of new variants of the coronavirus globally is also a concerning factor for the market,” he added.
The broader range on COMEX could be $1,780-1,820 and on the domestic front, prices could hover in the range of Rs 47,000- 47,800.
The gold-silver ratio currently stands at 74.91 to 1, which means 74.91 ounces of silver is required to buy an ounce of gold.
Silver prices jumped by Rs 275 to Rs 63,081 per kg against its closing price on September 14.
In the futures market, the gold rate touched an intraday high of Rs 47,264 and an intraday low of Rs 47,055 on the Multi-Commodity Exchange (MCX). For the October series, the yellow metal touched a low of Rs 45,662 and a high of Rs 50,040.
Gold futures for October delivery fell Rs 160, or 0.34 percent, to Rs 47,100 per 10 gram in evening trade on a business turnover of 8,199 lots. The same for December slipped by Rs 162, or 0.34 percent, to Rs 47,260 on a business turnover of 6,809 lots.
The value of October and December’s contracts traded so far is Rs 1,521.05 crore and Rs 211.42 crore, respectively.
Similarly, the Gold Mini contract for October declined Rs 122, or 0.26 percent at Rs 47,145 on a business turnover of 14,870 lots.
Trading Strategy
Tapan Patel- Senior Analyst (Commodities), HDFC Securities
We expect gold prices to trade sideways to up with COMEX spot gold resistance at $1,815 and support at $1,790 per ounce. MCX Gold October support lies at Rs 46,900 and resistance at Rs 47,300 per 10 gram.
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