Gold prices were trading weak at Rs 46,282 per 10 gram in the Mumbai retail market amid a lacklustre global trend and a firm dollar. The downside was, however, capped by a fall in equities, rupee and 10-year bond yields. The yellow metal traded in a narrow band as investors awaited the US Fed policy outcome and bond-tapering plans.
The price of 10 gram, 22-carat gold in Mumbai was Rs 42,394 plus 3 percent GST, while 24-carat 10 gram stood at Rs 46,282 plus GST. The 18-carat gold is quoted at Rs 34,712 plus GST in the retail market.
Bullion prices came under pressure last week as the dollar strengthened on strong US economic data ahead of the FOMC meeting scheduled on September 21-22, raising bets towards a hawkish approach by the US Central bank.
The CFTC data showed money managers increased their net long positions by 3,855 lots in last week.
Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund rose 1.74 tonnes to 1,001.66 tonnes. The ETF has a market value of $56.53 billion.
On the data front, preliminary Manufacturing and Service PMI data from major economies are also scheduled this week.
The US dollar index traded higher at 93.37, up 0.22 percent against a basket of six rival currencies.
Spot gold moderately advanced by $5.75 to $1,760.72 an ounce at 1226 GMT in London trading.
MCX Bulldesk increased by 34 points or 0.25 percent at 13,731 at 17:58. The index tracks the real-time performance of MCX Gold and MCX Silver futures.
“Gold price remains subdued continuing its previous week's move, amidst the mercy of positive economic data, a firmer dollar and U.S. yields. The dollar index hit one month high; while U.S. yields traded around the level of 1.37. In this important week, with the policy meeting of BOE and BOJ, investors also await guidance from the U.S. Federal Reserve on when it is likely to start withdrawing its bond-buying programme. The Fed is expected to announce its tapering measures when it meets on Sept. 21-22. The pace of the tapering and the comments supporting it will be important to watch for, as along with the policy meet, speech from Governor Powell is also scheduled later this week,” said Navneet Damani, VP – Commodities Research at Motilal Oswal Financial Services.
The broader range on COMEX could be between $1,730- 1,775 and on the domestic front, prices could hover in the range of Rs 45,800- 46,180.
“COMEX gold trades higher near $1757/oz supported by a drop in US bond yields. However, the upside might be capped on the firm US dollar amid increased expectations that Fed may chalk out a plan for bond tapering. Fall in equities amid increasing concerns about the health of the Chinese economy, inflation concerns and geopolitical issues are supporting the yellow metal. ETF inflows also show some buying however the pace was modest. Gold's sharp fall has dented market sentiment and any gains might be capped ahead of the Fed's meeting this week,” said Ravindra Rao, CMT, EPAT, VP- Head Commodity Research at Kotak Securities.
The gold-silver ratio currently stands at 77.50 to 1, which means 77.50 ounces of silver is required to buy an ounce of gold.
Silver prices corrected by Rs 1,417 to Rs 59,714 per kg against its closing price on September 19.
In the futures market, the gold rate touched an intraday high of Rs 46,210 and an intraday low of Rs 45,880 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 gained Rs 194, or 0.42 percent, to Rs 46,180 per 10 gram in evening trade on a business turnover of 8,459 lots. The same for December rose by Rs 177, or 0.38 percent, to Rs 46,330 on a business turnover of 7,847 lots.
The value of October and December’s contracts traded so far is Rs 1,818.90 crore and Rs 238.72 crore, respectively.
Similarly, the Gold Mini contract for October climbed Rs 170, or 0.41 percent at Rs 46,212 on a business turnover of 19,620 lots.
Trading Strategy
Tapan Patel- Senior Analyst (Commodities), HDFC Securities
Gold prices traded under pressure on stronger dollar and FED speculation over asset tapering. The rise in US bond yields also added pressure to the prices over a round of positive US data. Global players are awaiting the outcome from the US FOMC meeting due this week.
We expect gold prices to trade sideways to down with COMEX spot gold resistance at $1,775 and support at $1,740 per ounce. MCX Gold October support lies at Rs 45,800 and resistance at Rs 46,300 per 10 gram.
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