Gold price slips marginally to Rs 49,117 per 10 gram on weak global cues

Gold prices declined Rs 207 to Rs 49,117 per 10 gram in the Mumbai bullion market on rupee depreciation and weak global cues. Gold prices have fallen below $1,800/oz on profit-booking by investors but rising US-China tension kept the downside limited.

The rate of 10 gram 22-carat gold in Mumbai was Rs 44,991 plus 3 percent GST, while 24-carat 10 gram was Rs 49,117 plus GST. The 18-carat gold quoted at Rs 36,838 plus GST in the retail market.

The World Gold Council in its mid-year outlook report today said the combination of high risk, low opportunity cost and positive price momentum looks to support gold investment and offset weakness in consumption from an economic contraction.

Investors have embraced gold in 2020 as a key portfolio hedging strategy as expectations for a faster recovery (V-shaped) from COVID-19 are shifting towards slower recovery (U-shaped), or potential setbacks from additional waves of infections (W-shaped), WGC noted.

Gold eased due to a firmer dollar, though concerns over surging coronavirus cases around the world and US-China tensions put a floor under bullion prices. Tensions also grew between the United States and China over disputed claims to offshore resources throughout the South China Sea, with the US officials saying China's claims were "unlawful."

“Market participants will focus on industrial production data expected from major economies and inflation numbers expected from the US. SPDR Gold Trust the world's largest gold-backed exchange-traded fund, said its holdings rose 0.3 percent to 1,203.97 tonnes on Monday”, said Navneet Damani, Vice President, Motilal Oswal.

The broader trend on COMEX could be in the range of $1775-1810 and on domestic front prices could hover in the range of Rs 48,500-49,250.

“Gold has fallen over 1 percent to trade near $1795/oz amid some profit-taking after a recent rally to 2011 highs. Despite the correction, price is still holding near support levels and a sustained decline is unlikely given the challenges to the global economy.” Ravindra Rao, VP- Head Commodity Research at Kotak Securities.

The gold/silver ratio currently stands at 95.64 to 1, which means the amount of silver required to buy one ounce of gold.

Silver prices eased Rs 425 to Rs 51,355 per kg from its closing on July 13.

In the futures market, gold rate touched an intraday high of Rs 49,084 and an intraday low of Rs 48,770 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 49,348.

Gold futures for August delivery slipped Rs 158, or 0.32 percent, at Rs 48,990 per 10 gram in evening trade on a business turnover of 9,242 lots. The same for October delivery was down Rs 111, or 0.23 percent, at Rs 49,160 on a business turnover of 10,488 lots.

The value of the August and October contracts traded so far is Rs 3,437.77 crore and Rs 419.24 crore, respectively.

Similarly, Gold Mini contract for August dropped Rs 160, or 0.33 percent at Rs 49,020 on a business turnover of 10,882 lots.

MCX Gold price is expected to trade in a range bound marking having support at Rs 48,650 whereas resistance is at Rs 49,050 level, according to Motilal Oswal.

At 12:28 (GMT), spot gold was down $3.68 at $1,798.95 an ounce in London trading.

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