Gold flat at Rs 44,861/10 gm on rupee weakness, silver eases by Rs 25

Gold prices gained slightly by Rs 33 to Rs 44,861 per 10 gram in the Mumbai retail market on rupee depreciation. Market players were on the edge as the two-day FOMC meet starts today.

The rate of 10 gram 22-carat gold in Mumbai was Rs 41,093 plus 3 percent GST, while 24-carat 10 gram was Rs 44,861 plus GST. The 18-carat gold quoted at Rs 33,646 plus GST in the retail market.

The bullion metal is showing some signs of recovery after the sharp sell-off in the last few weeks but remains volatile. It continued to sway along with US dollar and bond yields and this trend may continue unless there are fresh triggers.

The downside movement in gold is capped due to surging COVID-19 cases worldwide and strong US dollar and Treasury yields have kept the upside move capped.

The US dollar traded lower at 91.69, or down 0.15 percent against a basket of six rival currencies. 

The US 10-year treasury yields traded near 1.6 percent, down 1 basis point.

Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell by 1.75 tonnes to 1,050.32 tonnes.

Spot gold rose marginally by $0.73 to $1,732.55 an ounce at 12:05 GMT in London trading.

MCX Bulldesk dropped 25 points or 0.17 percent, at 14,295 at 17:36 hours. The index tracks the real-time performance of MCX Gold and MCX Silver futures.

Navneet Damani, Vice President, Motilal Oswal said, “Gold traded steady, as a volatile riskier asset kept the market participants on edge. US yields ease off from almost a one year peak and on the other hand equities saw some cheers amidst the optimism regarding a quick economic recovery. BOE Governor Bailey, said he was more hopeful about the economy, "with a strong dose of caution," and a recent increase in interest rates in capital markets was consistent with the chances of recovery from the COVID recession. With industrial production expected from major economies this week, market participants will focus on the US retail sales data due today, following January's 5.3% surge.” 

The broader range on COMEX could be between $1,715-$1,763 and on the domestic front, prices could hover in the range of Rs 44,670- Rs 45,370.

“COMEX gold trades mixed near $1,731/oz. Gold is choppy as support from US stimulus and retreat in US bond yields from recent high is countered by general optimism about the US economy and continuing ETF outflows. Gold may remain choppy ahead of Fed decision tomorrow; however, the general bias may be on the upside amid hopes that Fed may maintain a dovish stance”, said Ravindra Rao, VP- Head Commodity Research at Kotak Securities.

The gold/silver ratio currently stands at 67.01 to 1, which means the number of silver ounces required to buy one ounce of gold.

Silver prices eased by Rs 25 to Rs 66,940 per kg from its closing on March 5. 

In the futures market, the gold rate touched an intraday high of Rs 45,047 and an intraday low of Rs 44,817 on the Multi-Commodity Exchange (MCX). For the April series, the yellow metal touched a low of Rs 44,150 and a high of Rs 51,931.

Gold futures for April delivery gained by Rs 3, or 0.01 percent, at Rs 44,903 per 10 gram in evening trade on a business turnover of 9,439 lots. The same for June declined Rs 45, or 0.10 percent, at Rs 45,252 on a business turnover of 7,416 lots.

The value of the April and June’s contracts traded so far is Rs 1,954.49 crore and Rs 223.38 crore, respectively.

Similarly, Gold Mini contract for April slipped Rs 4, or 0.01 percent at Rs 44,902 on a business turnover of 23,604 lots.

Trading Strategy

Tapan Patel, Senior Analyst (Commodities), HDFC Securities

Gold prices extended gains from Monday despite stronger dollar and higher bond yields ahead of FED meeting. The inflation hedge is a key factor supporting gold buying as FED is committed to keep interest rates low.

We expect gold prices to trade sideways to up for the day with COMEX spot gold support seen at $1,710 and resistance at $1,740. MCX Gold April support lies at Rs 44,700 while resistance stands at at Rs 45,200.

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

Technically, International gold is trading with marginal bullish momentum where resistance is at $1,735-$1,745 levels. MCX Gold has been trading below the resistance of Rs 44,950 - Rs 45,150 levels. If prices breach the resistance levels, then Rs 45,500 levels could be tested on the upside whereas major support is at Rs 44,300 - Rs 44,150 levels.

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