Gold prices edged higher to Rs 44,865 per 10 gram on April 1 as participants increased their position as seen by the open interest. The precious metal was supported by US President Joe Biden’s $2.25 trillion infrastructure plan, loose monetary stance and lockdown imposed by nations to restrict coronavirus spread.
The yellow metal rose in three out of four trading sessions on the MCX and ended the week with a gain of Rs 125, or 0.28 percent. COMEX gold, on the other hand, slipped $5.8 or 0.34 percent during the same period.
Gold has been stuck in a range of $70 and is unable to break past $1,750 on the upside. On the downside, $1,680 is acting as the support level since March.
US Labour Department reported that nonfarm payrolls jumped by 916,000 jobs in March, the biggest gain since August.
In the retail market, the bullion metal closed at Rs 44,919 per 10 gram on Thursday, up 1.65 percent, tracking a positive global trend. The yellow metal rose by Rs 264 or 0.59 percent during the week in the domestic market.
The rate of 10 gram 22-carat gold in Mumbai was Rs 41,146 plus 3 percent GST, while 24-carat 10 gram was Rs 44,919 plus GST. The 18-carat gold quoted at Rs 33,689 plus GST in the retail market.
Due to reduction in import taxes and a correction in prices from record highs drew retail buyers and jewellers and bullion imports in March surged 471 percent from a year earlier to a record 160 tonnes, Reuters reported.
The US dollar index ended modestly higher at 93.04, up 0.10 percent on April 1 against the major cross. The dollar index hit 2021 high of 93.47 earlier this week and soared 0.29 percent in the week.
The spot gold/silver ratio currently stands at 69.26 to 1 indicating that silver has outperformed gold.
The spot rupee ended 0.81 percent higher against the dollar for the week. Gold ETF holdings continued outflow as holdings at SPDR Gold Shares fell to 1033 tonnes during the week, down from the previous week’s 1037 tonnes.
MCX Bulldesk increased 164 points, or 1.17 percent to end at 14,160. The index tracks the real-time performance of MCX Gold and MCX Silver futures.
Spot gold settled with a profit of $23.17 at $1,730.18 an ounce in London trading. The yellow metal has declined $166.31 or 8.77 percent in 2021.
“Gold prices witnessed strong recovery from key support levels of $1680 per ounce as ease in US bond yields and dollar decline boosted buying in the safe-haven asset. The dollar index fell below 93 marks while US 10-year treasury yields retreated to 1.68% from highs of 1.77% of the week. The yellow metal rebounded on dollar debasement after US President Joe Biden unveiled a multi-trillion infrastructure plan on Wednesday. The rising virus cases in Europe and fear of lockdown measures also supported gold prices during the week”, said Tapan Patel, Senior Analyst (Commodities), HDFC Securities
Patel expects gold prices to trade sideways to higher in the coming week as prices have held key support levels at $1,680 with important resistance at $1,760 per ounce. At MCX, Gold June prices have near term resistance at Rs 45,900 per 10 grams and support at Rs 44,600 per 10 gram.
In the futures market, the gold rate touched an intraday high of Rs 45,500 and an intraday low of Rs 44,911 on the Multi-Commodity Exchange (MCX). For the June series, the yellow metal touched a low of Rs 44,108 and a high of Rs 51,924.
Gold futures for June delivery gained by Rs 469, or 1.04 percent, to settle at Rs 45,404 per 10 gram with a business turnover of 12,315 lots. The same for August soared Rs 351, or 0.78 percent, at Rs 45,585 on a business turnover of 365 lots.
The value of June and August’s contracts traded on April 1 was Rs 3,017.70 crore and Rs 180.21 crore, respectively.
Similarly, Gold Mini contract for May edged higher by Rs 438, or 0.98 percent at Rs 45,199 on a business turnover of 17,042 lots.
Next Week Strategy
Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited
Strategy: We anticipate that next week, MCX Gold price will have a positive move towards Rs 45,700. This would be the correct range to sell in April contract for the target at Rs 44,600 – Rs 44,250, maintaining a stop loss at Rs 46,050.
Rationale: MCX Gold futures rose in the last two consecutive sessions, as a drop in US Treasury yields and the dollar prompted some gold shorts to cover their positions ahead of the Good Friday holiday. Many experienced traders have moved to the sidelines as trading conditions are relatively thin. Short-covering ahead of the long Easter weekend and Friday’s US non-farm payrolls report was likely responsible for the second consecutive price surge. The primary trend on the daily chart is still negative. If the price breaks above the resistance of Rs 45,650 – Rs 45,700, we may have a trend reversal in Gold price.
Events to watch out
Next week, markets will keenly await the Reserve Bank of India meeting outcome on April 7. The central bank is likely to maintain an accommodative stance.
US Services PMI, ISM Non-manufacturing PMI on April 5.
China Caixin Services PMI on April 6.
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