Gold prices dropped by Rs 359 to Rs 47,647 per 10 gram in the Mumbai retail market as the rupee strengthened for the fifth day, bullish economic data and negative overseas cues. The yellow metal slipped below the psychological $1,800/oz as US dollar and the benchmark bond yield rebounded.
The bullion price declined by Rs 783 or 1.62 percent during the week in the domestic market.
The price of 10 gram, 22-carat gold in Mumbai was Rs 43,645 plus 3 percent GST, while 24-carat 10 gram stood at Rs 47,647 plus GST. The 18-carat gold is quoted at Rs 35,735 plus GST in the retail market.
However, the downside in gold was capped by surging COVID-19 cases globally and fresh restrictions imposed in many countries to stem the spread of the virus.
Markets cautiously await for the US employment data due later on Friday for cues on Fed’s approach in the months ahead.
The US Labour Department said that the number of Americans filing claims for unemployment benefits fell by 14,000 to seasonally adjusted 385,000 for the week ended July 31 as companies held on to workers amid a labour shortage.
The US dollar traded higher at 92.42, up 0.19 percent against a basket of six rival currencies.
Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell by 0.36 tonne to 1,027.61 tonnes. The ETF has a market value of $59.49 billion.
Spot gold decreased by $4.83 to $1,799.74 an ounce at 1156 GMT in London trading.
MCX Bulldesk tumbled by 48 points or 0.33 percent, at 14,464 at 17:26. The index tracks the real-time performance of MCX Gold and MCX Silver futures.
“Gold prices edged lower as the dollar held gains ahead of the much-anticipated US jobs data, and many fed officials in their comments signalled the possibility of a sooner-than-expected policy tightening. Fed Governor Christopher Waller said that there may be a possibility of withdrawing the central bank's accommodative monetary policy earlier than the expectations, as progress can be seen in the economic recovery and improving labour market,” said Navneet Damani, VP – Commodities Research at Motilal Oswal Financial Services.
The broader range on COMEX could be $1790- 1830 and on the domestic front, prices could hover in the range of Rs 47,380- 47,865.
Prathamesh Mallya, AVP Research - Non-Agri Commodities and Currencies, Angel Broking Ltd said, “Upbeat economic data from the US increased fresh bets on some early tapering by the US Federal Reserve which pressured Gold prices. Any signs of a tighter monetary policy by the US central bank will underpin the US treasury yield and the dollar, in turn, denting appeal for the non-interest-bearing gold.”
He added that an increase in the number of US Fed officials voicing the possibility of an early tapering amid a stronger dollar might continue to weigh on the bullion metal prices.
The gold/silver ratio currently stands at 71.40 to 1, which means 71.40 ounces of silver is required to buy an ounce of gold.
Silver prices plunged by Rs 869 to Rs 66,727 per kg against its closing price on August 5.
In the futures market, the gold rate touched an intraday high of Rs 47,574 and an intraday low of Rs 47,369 on the Multi-Commodity Exchange (MCX). For the October series, the yellow metal touched a low of Rs 46,650 and a high of Rs 50,040.
Gold futures for October delivery slumped Rs 125, or 0.26 percent, to Rs 47,478 per 10 gram in evening trade on a business turnover of 13,149 lots. The same for December slipped Rs 141, or 0.29 percent, to Rs 47,667 on a business turnover of 1,022 lots.
The value of October and December’s contracts traded so far is Rs 1,427.50 crore and Rs 120.69 crore, respectively.
Similarly, Gold Mini contract for September eased Rs 100, or 0.21 percent at Rs 47,488 on a business turnover of 15,465 lots.
Trading Strategy
Tapan Patel- Senior Analyst (Commodities), HDFC Securities
Gold prices witnessed selling with a rise in US bond yields and hawkish tone from US Fed. The 10-year US Treasury yields rose to 1.20 percent recovering from 1.12 percent. The traders and investors will eye for key US payroll data on Friday evening.
We expect gold prices to trade sideways to down with COMEX spot gold resistance at $1,810 and support at $1,790 per ounce. MCX Gold October support lies at Rs 47,200 and resistance at Rs 47,800 per 10 gram.
Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited
Technically, International Gold is trading with a bearish bias near $1,800. Prices may test the major support levels of $1,798-1,790 in the coming sessions. On the domestic front, MCX October gold is trading with negative bias since morning. In the previous session, precious declined more than 300 points and we may witness the same to continue during the evening session.
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