Gold prices slumped by Rs 683 to Rs 48,345 per 10 gram at Mumbai retail market on the back of weak global trends and the dollar advanced to 5 weeks high amid investor shifting to riskier assets. However, the continued depreciation in the rupee capped the downside limited and market focus turns toward the Federal Reserve policy meeting this week.
The rate of 10 gram 22-carat gold in Mumbai was Rs 44,284 plus 3 percent GST, while 24-carat 10 gram was Rs 48,345 plus GST. The 18-carat gold quoted at Rs 36,259 plus GST in the retail market.
Jigar Trivedi, Research Analyst- Commodities Fundamental, Anand Rathi Shares & Stock Brokers said, “On Friday Comex gold sharply declined by 1% or $19 and closed at $1,877.85 per ounce weighed down by a stronger dollar which traded near 5-week highs as investors cheered new signs that the reopening economy is driving growth. The University of Michigan's consumer sentiment came above market expectations while jobless claims fell to a new pre-pandemic low.”
“We welcome the government’s decision to implement mandatory BIS hallmarking for jewellers across the country. We are looking at this as one of the landmark decisions that will change the way the industry has been functioning in India for a very long time,” said Ramesh Kalyanaraman, Executive Director – Kalyan Jewellers.
“Mandatory hallmarking will standardize the purity of gold jewellery and take the industry a long way towards being more structured as well as further push the ongoing shift of business and customers from the unorganized to the organized jewellery segment. More importantly, the new regulatory framework will ensure that customers get a fair value for their new jewellery purchases as well as their exchanged or collateralized old gold,” he added.
The US dollar eased to 90.46, down 0.07 percent against a basket of six rival currencies. The weakness in the greenback makes bullion metal cheaper for other currency holders.
Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund were unchanged at 1,044.61 tonnes, the highest since June 1. The ETF has a market value of $63.16 billion.
Spot gold tumbled by $27.24 to $1,850.48 an ounce at 12:17 GMT in London trading. The price is trading near a strong support zone of $1,850-1,870 and a break below the same will confirm further downside in the prices.
MCX Bulldesk tanked by 205 points or 1.35 percent, at 15,013 at 17:50. The index tracks the real-time performance of MCX Gold and MCX Silver futures.
“Gold prices slipped to more than one-week low, weighed down by a stronger dollar as focus turns to the Federal Reserve policy meeting this week. U.S. yields also saw an uptick although it is still hovering below the 1.5 marks. Last week, U.S. consumer prices were recorded better than the expectations in May, leading to the biggest annual increase in nearly 13 years as a reopening economy boosted demand for travel-related services. Although, Fed's Inflation being transitory dialogue weighed on the sentiment,” said Navneet Damani, VP – Commodities Research at Motilal Oswal Financial Services.
“Focus now shifts to the Fed’s June 15-16 policy meeting for further clarity on policymakers’ view on rising inflation and economic recovery. Demand for physical gold is seeing a rise in top hubs like India and China, although dealers were still forced to offer discounts, while businesses limped back to life in India as some COVID-19 restrictions were eased,” he said.
The broader range on COMEX could be between $1,850-1855 and on the domestic front, prices could hover in the range of Rs 48,240- 48,880.
“COMEX gold trades lower near $1861/oz as the US dollar held steady and US bond yields recovered amid positioning for Fed meeting this week. Mixed ETF flow and weaker Indian consumer demand also weighed on prices. Gold may remain under pressure amid firmer US dollar however a sharp fall is unlikely as Fed is likely to maintain a dovish stance,” said Ravindra Rao, CMT, EPAT, VP- Head Commodity Research at Kotak Securities.
The gold/silver ratio currently stands at 67.76 to 1, which means 67.76 ounces of silver is required to buy an ounce of gold.
Silver prices declined by Rs 799 to Rs 71,340 per kg against its closing price on June 11.
In the futures market, the gold rate touched an intraday high of Rs 48,750 and an intraday low of Rs 48,189 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 635, or 1.30 percent, to Rs 48,268 per 10 gram in evening trade on a business turnover of 11,418 lots. The same for October fell by Rs 643, or 1.31 percent, to Rs 48,582 on a business turnover of 2,772 lots.
The value of August and October’s contracts traded so far is Rs 2,497.23 crore and Rs 132.72 crore, respectively.
Similarly, Gold Mini contract for July edged lower Rs 587, or 1.20 percent at Rs 48,130 on a business turnover of 18,323 lots.
Tapan Patel- Senior Analyst (Commodities), HDFC Securities
Gold prices extended decline on firm dollar and FOMC speculation as recent data from the US has raised market speculation of a change in FED stance. The traders and investors are awaiting fresh triggers for US FOMC meet on Wednesday to enter fresh long.
We expect gold prices to trade sideways to down for the day with COMEX gold support at $1,850 and resistance at $1,880 per ounce. MCX Gold August support lies at Rs 48,100 and resistance at Rs.48,700 per 10 gram.
Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited
International Gold is trading with negative bias below $1,900 levels and may continue to decline and test the major support of $1,850-1,870 levels. On the domestic front, MCX Gold August has already declined more than 500 points from the previous session. We may expect a rise in prices in the evening session which may cover all the losses and the market may close in green.
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