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Gold tops Rs 53,000/10 gm for the first time, physical demand down 36% in Q2 2020

Navneet Damani, Vice President, Motilal Oswal, said the broader trend on COMEX could be in the range of $1,920-1,990. "On the domestic front, prices could hover in the range of Rs 52,160- 52,950."

July 29, 2020 / 07:57 PM IST

Gold prices topped Rs 53,013 per 10 gram for the first time in the Mumbai bullion market due to weakness in the dollar. Prices traded in a narrow trading range on July 29 as investors are awaited cues from the US Federal Open Market Committee (FOMC) meeting scheduled for later in the day. No major change in interest rates is expected, but any commentary against market expectations could usher volatility in metal prices.

The spectacular run in bullion prices has led to physical demand for gold falling 36 percent year-on-year in Q2 2020 to 677 tonne, the lowest since Q1 2009, according to Refinitiv data.

SPDR holdings rose 0.7 percent to 1,243.12 tonne on July 28.

The rate of 10 gram 18, 22 and 24-carat gold in Mumbai was Rs 39,760, Rs 48,560 and Rs 53,013, respectively, plus 3 percent GST.

Negotiations in the White House for providing $1 trillion in the new coronavirus relief still continues, on the other hand the Federal Reserve extended its lending facility till end of the year. Underscoring the economic impact from the virus, data showed that US consumer confidence fell more than expected in July.

“The increased volatility shows lack of conviction about sustainability of the recent sharp up move. A dovish stance by the Fed has been factored in . So, unless there is some surprise from today’s (July 29) Fed monetary policy meeting, gold could see some correction,” said Ravindra Rao, VP- Head Commodity Research at Kotak Securities.

Navneet Damani, Vice President, Motilal Oswal, said the broader trend on COMEX could be in the range of $1,920-1,990. "On the domestic front, prices could hover in the range of Rs 52,160- 52,950."

The gold-to-silver ratio currently stands at 82.44 to 1, which means the amount of silver required to buy one ounce of gold.

Silver prices fell Rs 1,570 to Rs 64,300 per kg from its closing on July 28.

In the futures market, gold touched an intraday high of Rs 52,846 and a low of Rs 52,415 on the Multi-Commodity Exchange (MCX). For the August series, the yellow metal touched a low of Rs 39,200 and a high of Rs 52,846.

Gold futures for August delivery gained Rs 157, or 0.30 percent, at Rs 52,748 per 10 gram in evening trade on a business turnover of 2,517 lots. The same for October delivery edged higher Rs 81, or 0.15 percent, at Rs 52,759 on a business turnover of 15,720 lots.

The value of the August and October contracts traded so far is Rs 3,458.87 crore and Rs 1,648.10 crore, respectively.

Similarly, Gold Mini contract for August rose Rs 42, or 0.08 percent, at Rs 52,773 on a business turnover of 4,284 lots.

At 12:10 (GMT), spot gold was down $2.12 at $1,956.41 an ounce in London trading.

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Sandeep Sinha
first published: Jul 29, 2020 07:57 pm