Gold rate edges lower for fifth day to touch Rs 44,516 per 10 gm on rising yields, firm dollar

Gold prices declined for the fifth day on the trot. The price dropped by Rs 327 to Rs 44,516 per 10 gram in the Mumbai retail market on a strong dollar and weak global cues. The precious metal was weighed down by elevated US Treasury yields after US Fed Chair Jerome Powell commented that a recovering economy could “create some upward pressure on prices”.

The yellow metal dropped Rs 2,054 or 4.41 percent this week in the domestic market. It has fallen Rs 5,782 or 11.5 year-to-date.

The rate of 10 gram 22-carat gold in Mumbai was Rs 40,777 plus 3 percent GST, while 24-carat 10 gram was Rs 44,516 plus GST. The 18-carat gold quoted at Rs 33,387 plus GST in the retail market.

The 10-year US T-bond yield inched higher to trade at 1.55 percent putting pressure on non-yielding bullion.

The US dollar trades crossed the 92 mark to trade at the highest level in 2021 against a basket of six rival currencies.

Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell by 4.1 tonnes to 1,078.30 tonnes.

Spot gold was down $2.86 to $1,694.57 an ounce at 1205 GMT in London trading.

MCX Bulldesk eased 43 points or 0.30 percent, at 14,098 at 17:38. The index tracks the real-time performance of MCX Gold and MCX Silver futures.

Navneet Damani, Vice President, Motilal Oswal said, “Gold slumped to a near nine-month low and headed for a third straight weekly decline, breaking below $1,700 an ounce after remarks on the US economy by Federal Reserve Chairman J Powell sent bond yields and dollar soaring. Market participants now await the unemployment and non-farm payroll data, which if reported below the expectation, could give some support to the bullion.”

“COMEX gold trades lower near $1692/oz. Gold remains pressurised by firmness in the US dollar on the back of higher bond yields, optimism about the US economy and safe haven buying. Also weighing on gold price is continuing ETF outflows. However, supporting the price is progress on US stimulus and loose monetary policy stance of major central banks. Gold may remain under pressure unless US bond yields correct or we see concrete measures on US stimulus,” said Ravindra Rao, VP- Head Commodity Research at Kotak Securities.

The gold/silver ratio currently stands at 68.35 to 1, which means the number of silver ounces required to buy one ounce of gold.

Silver prices slumped by Rs 998 to Rs 65,128 per kg from its closing on March 4. 

Also read: Gold enters bear market territory, experts see prices falling to Rs 41,500 - Rs 42,000 levels

In the futures market, the gold rate touched an intraday high of Rs 44,505 and an intraday low of Rs 44,217 on the Multi-Commodity Exchange (MCX). For the April series, the yellow metal touched a low of Rs 44,217 and a high of Rs 51,931.

Gold futures for April delivery fell by Rs 107, or 0.24 percent, at Rs 44,434 per 10 gram in evening trade on a business turnover of 12,839 lots. The same for June slipped Rs 126, or 0.28 percent, at Rs 44,610 on a business turnover of 4,273 lots.

The value of the April and June’s contracts traded so far is Rs 2,492.42 crore and Rs 174.99 crore, respectively.

Similarly, Gold Mini contract for April edged lower by Rs 89, or 0.20 percent at Rs 44,465 on a business turnover of 29,885 lots.

Trading Strategy

Tapan Patel, Senior Analyst (Commodities), HDFC Securities

Gold prices extended downside with a rally in US treasury yields and a fall in equity indices after the US FED chairman signalled an upward push in inflation. The 10-year US treasury yields rose to 1.60 percent while the dollar index was trading up by 0.30 percent by noon session. The investors and traders switched to the dollar as the best alternative to gold.

We expect gold prices to trade down for the day with COMEX spot gold support lies at $1,680 and resistance at $1,710. MCX Gold April support lies at Rs 44,000 and resistance lies at Rs 44,500.

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

We can see a parallel channel candlestick pattern on the hourly chart, and support levels in the range of $1,691-1,687 may be expected. Similarly, prices may get challenged on the upper side in the range of $1,704-1,708.

MCX gold has been trading in a sideways and bearish trend. Prices are closing below the 15-SMA since yesterday’s session and are closing still below the same level, due to which we might expect some bearishness in the major trend. We may expect prices to test support levels in the range of Rs 44,220-43,890. On the upper side, the price may fall from the range of Rs 44,840-44,960.

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