India Gold MCX February futures continued its southward journey on Monday tracking a weak trend seen in the international spot prices largely on account of on strong dollar and firm US Treasury Yields.
Spot gold was down to $1,844.51 per ounce after having touched its lowest since December 15 on Friday. US gold futures gained to $1,844, said a Reuters report.
U.S. Treasury yields held firm after a plunge in payrolls last month raised expectations of more federal spending to aid the virus-battered economy, helping the dollar rise 0.2% against rival currencies, added the report.
On the Multi-Commodity Exchange (MCX), February gold contracts were trading lower by 0.41 percent at Rs 48,766 for 10 grams at 0920 hours. March silver was trading 0.44 percent lower at Rs 63,948 a kilogram.
Experts are of the view that the trend in precious metal could remain week. Crucial support for Gold is placed 48200-48600 while Silver has support at Rs 63200-62500 levels.
On Friday, gold and silver prices settled on a negative note in the international markets. Gold February futures contract settled at $1,849.90 per troy ounce, down by over 3 percent, and Silver March futures contract settled at $25.49 per troy ounce.
Domestic markets were also settled on a weaker note. Gold February futures contract settled at Rs48,967 per 10 grams with a loss of about 4 percent, and silver March futures contract settled at Rs64,231 per kilogram with a loss of over 8 percent.
Gold slumped on Friday as prospects for a smooth transition of power in Washington and a jump in U.S. Treasury yields hammered the precious metals complex. The dollar index also rebound from nearly three-year lows and settled above 90 mark pushed precious metals lower, suggest experts.
“We expect precious metals to remain volatile this week after violent protests in the United States, a spike in the U.S. 10 years bond yields, rebound in the dollar index, the surge in the covid-19 cases and rollout of vaccines,” Manoj Jain, Director (Head-Commodity & Currency Research) at Prithvi Finmart told Moneycontrol.
“We expect both sides move in the precious metals. At MCX, Gold has support at 48600-48200 and resistance is placed at 49440-49700 levels. Silver has support at 63200-62500 and resistance at 65500-66660 levels,” he said.
Jain expects both the side moves in the precious metals on Monday if the dollar index sustains above 90 marks then sell on rise strategy could work in the precious metals.
Sriram Iyer, Senior Research Analyst at Reliance Securities
International gold and silver prices crashed on Friday with gold falling 4%, while silver fell almost 10% as prospects for a smooth transition of power in Washington and a jump in U.S. Treasury yields weighed on the precious complex.
Domestic gold and silver crumbled on Friday, tracking the weak overseas trend. Meanwhile, the U.S. Dollar Index rose from the 2 -year lows and weighed on prices.
Domestic bullion could trade lower this Monday morning, tracking the international prices. Technically, MCX Gold February has corrected more than 4 percent in the last session and reached its support zone 48800-48000 levels. Support is at 48600-48250 levels. Resistance is at 49150-49300 levels.
MCX Silver March was unable to sustain above 69000 levels. It has reached a support zone near 63600-63000 levels from where it could bounce back up to 64700-65900 levels.
Ravindra Rao, VP- Head Commodity Research at Kotak Securities
COMEX gold has seen a volatile start to the week and has moved in a wide range of $1856-1817.1/oz and is currently trading 0.4% lower near $1829/oz.
Gold trades mixed as support from disappointing US jobs report, hopes of higher US stimulus, rising virus cases is countered by a sharp rebound in US dollar index on the back of rise in US bond yield to March 2020 highs.
ETF investors moved to the sidelines on Friday. After a sharp fall in the last few weeks, the US dollar is attempting some recovery and this could keep the pressure on gold prices however we do not expect a sustained decline with an increased expectation of additional stimulus.Disclaimer
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