Gold gains Rs 180 to Rs 45,913/10 gm, silver slips

Gold prices gained Rs 180 to Rs 45,913 per 10 gram in the Mumbai bullion market on a depreciating dollar-rupee and weakness in the stock market. The yellow metal gained as investor sought safety in the safe haven after the US threatened to impose tariffs on China for mishandling of the novel coronavirus, or COVID-19, pandemic.

Major gold trading centres have remained shut in the country due to the lockdown announced to prevent the spread of coronavirus.

The rate of a 10 gram 18, 22 and 24-carat gold in Mumbai was Rs 34,435, Rs 42,056 and Rs 45,913 plus 3 percent GST, respectively.

According to Navneet Damani, Vice President, Motilal Oswal, gold inched higher as risk sentiment was weakened by rising US-China tensions over the coronavirus pandemic, while a firmer dollar capped gains.

US President Trump hinted that raising tariffs on China is certainly an option as he considers ways to retaliate for the spread of coronavirus outbreak.

US Federal Reserve officials warned about the potential lasting scars to the workforce and productivity if the recovery is not handled well. Market participants will keep an eye on the EU economic forecast report.

The broader trend on Comex could be $1,685-1,725/oz and on domestic front prices could hover in the range of Rs 45,270-46,000, Damani stated.

Comex Gold rose more than a percent on May 5 as fresh tensions between the US and China has triggered safe haven buying in the yellow metal, said Ravindra Rao, VP- Head Commodity Research at Kotak Securities.

Rao said Comex Gold may face resistance near $1,725/oz if the bulls succeed in taking it above $1,725. "The upside might extend till $1,738/oz. On the flipside, if the bulls fail in taking it above $1,725/oz, then it can trade in the $1,725-1,710/oz range."

The gold/silver ratio currently stands at 111.16 to 1, which means the amount of silver required to buy one ounce of gold.

Silver prices slipped Rs 900 to Rs 41,300 per kg from its closing on April 30.

In the futures market, gold rate touched an intraday high of Rs 45,978 and an intraday low of Rs 45,461 on the MCX. In the June series, the yellow metal touched a low of Rs 36,572 and a high of Rs 47,327.

Gold futures for delivery in June gained Rs 327, or 0.72 percent, on the MCX at Rs 45,854 per 10 gm in evening trade on a business turnover of 13,910 lots. The same for August delivery rose Rs 399, or 0.87 percent, at Rs 46,095 on a business turnover of 6,276 lots.

The value of the June and August contracts traded so far is Rs 2,234.17 crore and Rs 301.23 crore, respectively.

Similarly, Gold Mini contract for June jumped Rs 317, or 0.70 percent at Rs 45,842 on a business turnover of 9,970 lots.

"Gold prices traded higher from May 1 after US President used a tougher tone for China and signalled to impose tariffs, accusing China for mishandling of the COVID 19 pandemic. The yellow metal prices may keep the risk premium higher in the prices on slower economy growth despite of announcements of massive stimulus packages," Tapan Patel- Senior Analyst (Commodities), HDFC securities.

He expects prices to trade sideways with MCX Gold June futures taking support at Rs 45,600 and facing resistance at Rs 46,000/10 gm.

Axis Securities has advised its clients to buy June gold at Rs 45,800 with stop loss at Rs 45,650 and target of Rs 46,000.

At 12:27 pm (GMT), spot gold was up by $2.58 at $1,702.95 an ounce in London trading.