Gold prices declined for the second straight on March 2. The price of the yellow metal fell by Rs 467 to Rs 45,509 per 10 gram in the Mumbai retail market on rupee appreciation and firm equity market. It traded sideways amid a negative trend in the international market on positive economic data from the US and a stronger dollar.
The bullion prices have fallen over Rs 1,000 or 2.28 percent in the first two days of March in the domestic market.
The rate of 10 gram 22-carat gold in Mumbai was Rs 41,686 plus 3 percent GST, while 24-carat 10 gram was Rs 45,509 plus GST. The 18-carat gold quoted at Rs 34,132 plus GST in the retail market.
The consistent rally in gold which started due to signs of the global recession has now ended, as month-on-month (MoM) prices have been cooling off. The low interest rate and higher liquidity scenario are ebbing. The fall in bullion prices will be supported by the ongoing widespread rollout of vaccines, which augurs well for investors who wish to park their money in riskier asset classes like stocks and hence lower portfolio weightage in safe haven assets like gold, said Care Ratings in a note.
The US dollar trades higher at 91.15, or 0.13 percent against a basket of six currencies, the highest level since February 5. The dollar has benefitted from optimism about the US economy, higher bond yields and safe-haven buying.
Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, decreased by 9 tonnes to 1,084.5 tonnes, the lowest since May 20.
Spot gold was marginally higher by $3.94 to $1,728.93 an ounce at 12:22 GMT in London trading.
MCX Bulldesk eased 25 points or 0.17 percent, at 14,470 at 17:47. The index tracks the real-time performance of MCX Gold and MCX Silver futures.
Navneet Damani, Vice President, Motilal Oswal said, “Gold looked like it was getting past February’s misery, although by the end of the day with rising US yields, stronger dollar and positive economic data capped all gains for the metal. US manufacturing activity increased to a three-year high in February amid a surge in new orders. The US Senate will start debating President Joe Biden's coronavirus relief bill this week. The Benchmark US yields have come down from a one year high hit last week, but continue to remain elevated, while dollar index held near a four week peak."
"In this important week apart from Service PMI expected from major economies and US non-farm data, market participants are also expecting some comments from the Fed on rising yields, which could trigger further volatility in the market", he added.
The broader range on COMEX could be between $1,695-$ 1,740 and on the domestic front, prices could hover in the range of Rs 44,800- Rs 45,500.
“COMEX gold trades recovered from early losses to trade near $1721/oz. Gold remained under pressure by firmness in the US dollar, higher bond yields and continuing ETF outflows. However, supporting price is progress on US stimulus, loose monetary policy stance of central banks and increased inflation expectations. Gold multiple attempts at pullback have failed indicating the strength of bears and this may not change unless the US dollar corrects sharply”, Ravindra Rao, VP- Head Commodity Research at Kotak Securities.
The gold/silver ratio currently stands at 67.56 to 1, which means the number of silver ounces required to buy one ounce of gold.
Silver prices plummeted by Rs 1,113 to Rs 67,353 per kg from its closing on March 1.
In the futures market, the gold rate touched an intraday high of Rs 45,479 and an intraday low of Rs 44,975 on the Multi-Commodity Exchange (MCX). For the April series, the yellow metal touched a low of Rs 44,975 and a high of Rs 51,931.
Gold futures for April delivery gained by Rs 102, or 0.23 percent, at Rs 45,410 per 10 gram in evening trade on a business turnover of 13,651 lots. The same for June rose Rs 134, or 0.29 percent, at Rs 45,600 on a business turnover of 3,549 lots.
The value of the April and June’s contracts traded so far is Rs 3,332.59 crore and Rs 255.71 crore, respectively.
Similarly, the Gold Mini contract for April jumped Rs 83, or 0.18 percent at Rs 45,443 on a business turnover of 27,288 lots.
Trading Strategy
Tapan Patel, Senior Analyst (Commodities), HDFC Securities
Gold prices traded under pressure on dollar rally and positive US manufacturing data which boosted risk on sentiment. The optimism over US economic recovery has dampened investment demand for precious metals. The yellow metal halted decline on fresh warning of rising cases in Europe.
We expect gold prices to trade sideways to down for the day with COMEX spot gold support lies at $1,690 and resistance at $1,730. MCX Gold April support lies at Rs 44,900 and resistance lies at Rs 45,500.
Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited
International Gold prices have crossed 15-SMA and are closing above the moving average so we may expect some bullishness in the short-term. We may witness prices to test support levels in the range of $1,700-$1,710 and prices may get challenged on the upside at $1,745-$1,755 levels. MCX gold has been trading with a positive bias and we expect prices to cross 15-SMA which might result in bullishness for a short period. The bullion has resistance at Rs 45,600-45,800 levels.
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