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Last Updated : Oct 26, 2020 06:44 PM IST | Source: Moneycontrol.com

Gold rates flat at Rs 51,238 per 10 gm; price could reach Rs 67,000 in next 12 months, says Motilal Oswal

Silver prices dropped by Rs 839 to Rs 61,706 per kg from its closing on October 23.

Representative Image
Representative Image

Gold prices were steady at Rs 51,238 per 10 gram in the Mumbai retail market on a weaker rupee and muted global cues. The precious metal had gained 0.62 percent last week in the domestic market.

The rate of 10 gram 22-carat gold in Mumbai was Rs 46,934 plus 3 percent GST, while 24-carat 10 gram was Rs 51,238 plus GST. The 18-carat gold quoted at Rs 38,429 plus GST in the retail market.

The US dollar trades with modest gains at 92.96 or up 0.22 percent against a basket of major currencies after a 1 percent decline last week.


The bullion metal traded in a tight range this month in tandem with the dollar as Republicans and Democrats wrangled over the stimulus package before November 3 presidential election. Gold is hovering around $1,900/oz awaiting a new trigger for a fresh rally.

Money managers raised their net long US gold futures and options positions by 15,488 contracts to 135,311 and US futures and options positions by 5,593 contracts to 40,065 in the week up to October 20, according to CFTC data.

Regardless of who ultimately wins this year's presidential election, an increase in government financial deficits is certain. This condition alone, without the added benefit from either candidate’s policies, bodes well for Gold and Silver prices in nominal terms, said Motilal Oswal in its report titled “How precious is US elections?”

The brokerage firm said in the short term, Comex Gold could be forming a base around $1,880-1,840, while rallies are likely to be capped in the range of $1,940-1,975. Similarly on the domestic front dips towards Rs 49,500-48,500 is a good range to buy with short-term upsides being capped around Rs 52,200-54,000. On the longer-term prices front, both the presidents are likely to benefit yellow metal and the brockerge firm continues to maintain its target of $2,500 on the Comex and Rs 65,000-67,000 on the domestic front.

Spot gold was trading up $2 at $1,903.56 an ounce at 1158 GMT in London trading.

Exchange-traded funds (ETFs) cut 102,614 troy ounces of gold from their holdings in the last trading session, bringing this year’s net purchases to 28 million ounces, as per Bloomberg data.

The investors will keep an eye on China’s top policymaker meet to hammer out the country’s future economic blueprint. They also will be looking at US elections next week. 

MCX iCOMDEX Bullion Index inched lower by 16.69 points, or 0.11 percent, at 15,595.83 at 17:32. The index tracks the real-time performance of MCX Gold and MCX Silver futures.

Navneet Damani, Vice-President, Motilal Oswal said, “Gold prices eased to an over one-week low in today's early Asia trade as the dollar firmed and talks over the new US coronavirus aid package showed no signs of progress. According to US House Speaker Nancy Pelosi, the Trump administration was reviewing the latest plan for more COVID-19 relief over the weekend and a response on the same can be expected today. Pelosi was optimistic regarding a deal that could be reached. Several parts of the US and Europe are again seeing a spike in COVID cases, although the market right now is focused on the updates on the relief bill and US presidential election, justifying the range-bound movement in gold prices.” 

The broader trend on COMEX could be in the range of $1885- 1920 and on domestic front prices could hover in the range of Rs 50,530-50,900.

“Gold eased on Monday as the greenback has rebounded and there seem no signs of progress on coronavirus relief package in the US. The focus will shift to the dollar's move and new home sales data to be released later in the session. Moreover, countries like the UK, the US and Germany will release Q3 GDP data during the week. Fear of the second wave of the virus in Europe may stay as a supportive trigger for the yellow metal,” said Jigar Trivedi, Research Analyst- Commodities Fundamental, Anand Rathi Shares and Stock Brokers.

The gold/silver ratio currently stands at 83.03 to 1, which means the amount of silver required to buy one ounce of gold. 

Silver prices dropped by Rs 839 to Rs 61,706 per kg from its closing on October 23.

In the futures market, the gold rate touched an intraday high of Rs 50,975 and an intraday low of Rs 50,552 on the Multi-Commodity Exchange (MCX). For the December series, the yellow metal touched a low of Rs 48,384 and a high of Rs 56,379.

Gold futures for December delivery rose by Rs 67, or 0.13 percent, to touch Rs 50,906 per 10 gram in evening trade on a business turnover of 13,997 lots. The same for February gained Rs 123, or 0.24 percent, at Rs 51,049 on a business turnover of 1,892 lots.

The value of the December and February’s contracts traded so far is Rs 2,995.56 crore and Rs 46.33 crore, respectively.

Similarly, Gold Mini contract for November edged higher Rs 47, or 0.09 percent at Rs 50,867 on a business turnover of 7,206 lots.

Trading strategy

Sriram Iyer, Senior Research Analyst at Reliance Securities

International gold prices were trading weak this Monday evening in Asian trade pressured by a firmer dollar and stalled progress in talks for a new US coronavirus aid package. The US dollar took support from news reports that France, Spain and Italy could announce complete lockdown to curb the spread of coronavirus.

Technically, LBMA Gold Spot is trading on a negative note where it's struggling near 21-DMA which is placed at $1,900 below which could test $1,882 levels. However, it could trade in the range of $1,880-$1,909 levels.

Domestic gold is trading flat this Monday evening trade, tracking weak overseas prices. Technically, MCX Gold December is expected to trade in a narrow range where it is holding strong support near Rs 50,700 levels and upside cap is at Rs 51,180 levels where prices are likely to trade within these levels in intraday session.

Ravindra Rao, VP-Head Commodity Research, Kotak Securities

COMEX gold trades moderately lower near $1902/oz amid a 0.30 percent rise in US Dollar Index. ETF outflows have also shown weaker investor buying in the last few sessions. However, global growth worries amid rising virus cases and uneven recovery might support the prices at lower levels. Gold traders may remain on the sidelines until there is more clarity on US stimulus. The broad range of $1880-1930 would continue at least until the US elections.

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Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
First Published on Oct 26, 2020 06:44 pm