Gold prices rose for the third successive day by Rs 161 at Rs 47,005 per 10 gram in the Mumbai bullion market on weakness in the US dollar and stronger equity market. The yellow metal gained on demand for safe-haven metal and ahead of the Federal Reserve comment on the US economy and future course of action.
“After a gap of almost 70 days of lockdown, business in Zaveri Bazaar has restarted with the new normal. However, commuting of staff and customer in a metropolitan city like Mumbai is impossible without public transport. The safety and security of shops in the absence of adequate staff are a key concern. Migration of the labour to their native is also a big hurdle for jewellery manufacturer," said Surendra Mehta, National Secretary, IBJA.
The annual demand for jewellery was around 700 tonnes and Zaveri Bazaar had a daily turnover of around Rs 1,100 crore, Mehta said. "We expect gradual normalcy in the next three months and back to normal by October," he said.
Many marriages were likely to be preponed and the "big fat India wedding" expenses likely to shift to jewellery buying. The percentage margin would improve with the reduction in operational and marketing cost, which would be a positive for the industry, Mehta added.
The rate of 10 gram 22-carat gold in Mumbai was Rs 43,057 plus 3 percent GST, while 24-carat 10 gram was Rs 47,005 plus GST. The 18-carat gold quoted at Rs 35,254 plus GST in the retail market.
Navneet Damani, Vice President, Motilal Oswal, said the Fed would publish its first economic projections since the coronavirus pandemic set off a recession in February. Estimates were expected to signal a collapse in output this year and near-zero interest rates for the next few years. With the policy meeting, market participants would also keep an eye on the inflation number from the US. The broader trend on Comex could be in the range of $1,700-1,740 and on domestic front prices could hover in the range of Rs 46,300-47,000.
Ravindra Rao, VP-Head Commodity Research at Kotak Securities, said gold may remain choppy ahead of the Fed decision but the general bias would be on the upside amid growth concerns.
The gold/silver ratio currently stands at 98.29 to 1, which means the amount of silver required to buy one ounce of gold.
Silver prices rose Rs 125 to Rs 47,820 per kg from its closing on June 9.
In the futures market, gold touched an intraday high of Rs 46,840 and an intraday low of Rs 45,561 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 48,190.
Gold futures for August delivery gained Rs 224, or 0.48 percent, at Rs 46,818 per 10 gram in evening trade on a business turnover of 14,024 lots. The same for October delivery rose Rs 229, or 0.49 percent, at Rs 46,987 on a business turnover of 5,477 lots.
The value of the August and October contracts traded, so far, is Rs 2,028.69 crore and Rs 30.91 crore, respectively.
Similarly, Gold-Mini contract for July was up Rs 229, or 0.49 percent at Rs 46,824 on a business turnover of 10,841 lots.
MCX Gold has intraday support at Rs 46,440-46,270 whereas resistance is at Rs 46,835-46,950, according to Motilal Oswal. The brokerage firm advised clients to buy near support.
The broking firm said spot gold had support at $1,710-1,705 and resistance at $1,723-1,730 levels.
At 1209 GMT, spot gold gained $8.82 at $1,723.42 an ounce in London trading.
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