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Gold snaps 5-day losing streak, up Rs 281 on positive global cues, weaker rupee; silver nears Rs 60,000/kg

The broader range on COMEX could be between $1,725-1,760 and on the domestic front, prices could hover in the range of Rs 45,750-46,370, said Damani.

Mumbai / September 29, 2021 / 06:19 PM IST

Gold prices rose Rs 281 to Rs 46,238 per 10 gram in the Mumbai bullion market snapping a five-day losing streak on positive global cues, rupee depreciation and weakness in the equity market amid risk aversion. However, the upside in the yellow metal was capped by strength in the dollar index surging to 11 month high.

The price of 10 gram, 22-carat gold in Mumbai was Rs 42,354 plus 3 percent GST, while 24-carat 10 gram stood at Rs 46,238 plus GST. The 18-carat gold is quoted at Rs 34,679 plus GST in the retail market.

Meanwhile, markets will also monitor a debt-ceiling impasse in the US after Republicans in the Senate blocked a Democrat move to raise the debt limit.

On the data front, US consumer confidence fell to a seven month low in September as a relentless rise in COVID-19 cases deepened concerns about the economy’s near-term prospects, giving some support to the metal prices.

Investors will keep the focus on comments from Governors of major central bankers scheduled later today.

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Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund fell by 3.5 tonnes to 990.03 tonnes. The ETF has a market value of $55.16 billion.

The US dollar index traded higher at 93.93, up 0.17 percent against a basket of six rival currencies, the highest since October 2020. The rise in the greenback makes gold expensive for holders of other currencies.

Spot gold soared by $9.33 to $1,743.28 an ounce at 1205 GMT in London trading.

MCX Bulldesk increased by 21 points or 0.15 percent at 13,726 at 17:36. The index tracks the real-time performance of MCX Gold and MCX Silver futures.

“Gold prices traded steady after inching lower in the previous session, weighed by a rise in the dollar and US Treasury yields, as positive comments from Fed officials regarding tapering and rise in interest rate weighed on the safe haven appeal. The dollar index hovered near a more than 10-month high; whereas US 10-year Treasury yields held close to over three month peak. Fed Chair Jerome Powell said the US economy is still far from achieving maximum employment, a key component of the central bank’s requirements for raising interest rates. Although few other fed officials mentioned that rising inflation concerns might require Fed to use its tools earlier than expected,” said Navneet Damani, VP – Commodities Research at Motilal Oswal Financial Services.

The broader range on COMEX could be between $1,725-1,760 and on the domestic front, prices could hover in the range of Rs 45,750-46,370.

The gold-silver ratio currently stands at 77.25 to 1, which means 77.25 ounces of silver is required to buy an ounce of gold.

Silver prices rose by Rs 224 to Rs 59,852 per kg against its closing price on September 28.

In the futures market, the gold rate touched an intraday high of Rs 46,172 and an intraday low of Rs 45,908 on the Multi-Commodity Exchange (MCX). For the October series, the yellow metal touched a low of Rs 45,662 and a high of Rs 50,040. 

Gold futures for October delivery gained Rs 87, or 0.19 percent, to Rs 45,940 per 10 gram in evening trade on a business turnover of 730 lots. The same for December jumped by Rs 185, or 0.40 percent, to Rs 46,141 on a business turnover of 13,796 lots.

The value of October and December’s contracts traded so far is Rs 1,102.11 crore and Rs 1,766.73 crore, respectively.

Similarly, the Gold Mini contract for November advanced Rs 109, or 0.24 percent at Rs 46,081 on a business turnover of 16,453 lots.

Trading Strategy

Tapan Patel- Senior Analyst (Commodities), HDFC Securities

Gold prices pared some of the previous losses on Wednesday after falling to seven week low. Gold prices traded under pressure with the dollar rallying to 10 months high while US bond yields rose to three months high. The rally in US bond yields is the downside risk for bullion prices. The 10 year US Treasury yields rose to 1.51% on interest rate speculation. The US FED has signalled stimulus unwinding by mid-2022 which has triggered selling in precious metals. 

We expect gold prices to trade sideways to down with COMEX spot gold resistance at $1752 and support at $1730 per ounce. MCX Gold October support lies at Rs. 45800 and resistance at Rs.46300 per 10 gram.

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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.
Sandeep Sinha

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