Gold prices rose 0.44 percent this week to settle at Rs 47,560 per 10 gram on upbeat economic data, rupee depreciation, weakness in US Treasury yields and dollar. The precious metal was supported by safe-haven appeal on rising coronavirus cases globally and a sharp fall in cryptocurrencies.
The yellow metal rose in three out of five trading sessions on the MCX and ended the week with a gain of Rs 207. COMEX gold, on the other hand, modestly jumped $2 or 0.11 percent during the same period.
The bullion metal has been trading higher than 20, 50 and 100 days' moving averages but lower than the 5 and 200 days' moving averages on the daily chart. The momentum indicator Relative Strength Index (RSI) is at 62.06, indicating bullish momentum in prices.
MCX Gold has witnessed bullish movement so far in April amid reports of a second and third wave of COVID-19 in India and European countries.
The bullion metal regained its safe-haven status as Bitcoin price slumped below $50,000, down over 12 percent during the week after reports indicated that Washington is planning to raise capital gains tax. The cryptocurrency has attracted investors’ attention and emerged as an inflation hedge and a lot of smart money moved to Bitcoin as a safe-haven asset.
Bitcoin has tumbled $15,973 or 24.65 percent from the high of $64,778 it touched on April 14.
The spot rupee ended 0.89% lower against the dollar for the week.
The dollar index fell below 91 mark, shedding 0.76% while US 10-year treasury yields ended at 1.55% from the 14-month high of 1.77% made recently.
The CFTC data showed that money managers increased their net long positions by 4534 lots in the last week.
Also read: Bitcoin plunge helps gold regain safe-haven status; silver tumbles
“Fundamentally for the coming month, we expect international Gold futures to continue to trade bullish as the US Dollar Index and Bond yields are expected to witness a further decline. Central banks all across the globe have remained less hawkish as they believe that their economy is expected to revive back by the end of the year 2021," said Sunand Subramaniam, Senior Research Associate at Choice Broking.
The gold market is focused on the recovery across Europe and runaway inflation concerns across emerging markets. A stronger Euro and hotter pricing pressures globally is what gold needs over the next several months to make a run towards the $1,900 level.
“Choppy trend may be witnessed in global gold prices due to multiple vaccine developments and recovering global economy, but then, the long term outlook for gold continues to remain bullish”, Subramaniam noted.
“Gold prices traded mixed during the week keeping the firm trading range on a weaker dollar and positive economic data. The yellow metal failed to break the psychological level of $1800 at COMEX despite a fall in US bond yields and a decline in dollar index. The upside in gold prices were capped by stronger than expected economic data from US and ease of lockdown measures in Europe”, said Tapan Patel, Senior Analyst (Commodities), HDFC Securities.
Patel expects gold prices to trade sideways to higher in the coming week with COMEX spot gold resistance at $1,800 per ounce. The break above $1,800 may lead prices towards $1,840 with support at $1,750 per ounce. At MCX, Gold June prices have near-term resistance at Rs 48,200 per 10 grams and support at Rs 46,800 per 10 gram.
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In the retail market, the bullion metal closed at Rs 47,806 per 10 gram on Friday on rupee depreciation and firm global trend. The yellow metal rose by Rs 637 or 1.35 percent during the week in the domestic market.
The spot gold/silver ratio currently stands at 68.32 to 1 indicating that gold has outperformed silver.
Gold ETF holdings continued outflow as holdings at SPDR Gold Shares was unchanged at 1,020 tonnes during the week.
MCX Bulldesk tumbled 77 points or 0.51 percent to close at 14,875. The index tracks the real-time performance of MCX Gold and MCX Silver futures.
Spot gold settled with a loss of $6.88 at $1,777.11 an ounce in London trading.
In the futures market, the gold rate touched an intraday high of Rs 48,026 and an intraday low of Rs 47,384 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 dropped by Rs 212, or 0.44 percent, to settle at Rs 47,560 per 10 gram with a business turnover of 10,949 lots. The same for August declined by Rs 225, or 0.47 percent, to Rs 47,840 on a business turnover of 2,817 lots.
The value of June and August’s contracts traded on Friday was Rs 3,894.61 crore and Rs 184.56 crore, respectively.
Similarly, Gold Mini contract for May slipped by Rs 227, or 0.48 percent at Rs 47,199 on a business turnover of 13,478 lots.
Next Week Strategy
Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited
Strategy: In our anticipation, there would be an initial decline in MCX Gold price at the beginning pf next week where we may find support near Rs 47,200 -Rs 47,250 and this would be a correct range to buy in May contract for the target at Rs 48,400, maintaining stop loss at Rs 46,800.
Rationale: MCX Gold futures declined in the last two consecutive sessions and the price is trading near 100 day SMA on the daily chart. If the 10-year yield calms down significantly, then it is likely that the gold markets will start to strengthen again from this level. If we clear Rs 48,400 levels, then we may next move towards Rs 49,700.For all commodities-related news, click here
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