Gold up Rs 98 to Rs 45,883 per 10 gram, silver slips

Gold prices rose Rs 98 to Rs 45,883 per 10 gram in the Mumbai bullion market on May 12 a weaker dollar but stronger rupee capped the gain. However, the precious metal found support on the downside from the emergence of a new wave of coronavirus infection reported in some countries.

The precious metal prices normally tend to move inversely with the US dollar. As the dollar strengthens, investors prefer greenback over the yellow metal. Demand for gold grows when the dollar weakens.

The US dollar index, measured against a basket of six currencies, fell 0.39 percent to 99.87.

The rate of 10 gram 22-carat gold in Mumbai was Rs 42,028 plus 3 percent GST, while 24-carat 10 gram was Rs 45,883 plus GST. The 18-carat gold quoted at Rs 34,412 plus GST in the retail market.

According to Motilal Oswal Vice President Navneet Damani, gold prices were steady in the early trade after two straight sessions of falls, as a stronger dollar countered fears of a new wave of coronavirus infections.

US Federal Reserve policymakers say they will do what it takes to cushion an economy crushed by the widespread lockdowns, but there's one thing they probably won't do: take interest rates below zero.

Japan, on the other hand, said it could lift a state-of-emergency in many regions this week, if new infections were under control.

The broader trend on Comex could be in the range of $1,690-1,730 and on the domestic front, prices could hover in the Rs 45,450-46,180 range.

Gold prices witnessed recovery on May 12 on growing worries over the second wave of coronavirus infections in China and South Korea.

Investors and traders are waiting for fresh cues, as prices are stuck in the narrow $1,680-$1,720 trading range for the last few days, said Tapan Patel, Senior Analyst (Commodities), HDFC Securities.

Comex gold was trading 0.53 percent higher, as the metal's safe-haven status got a boost from concerns over second wave of COVID-19 cases. Still, the range move is on in gold as there are mixed triggers making the metal directionless.

Investors will be watching US Fed chair Jerome Powell speech scheduled later on May 12, which might give some direction to gold prices, said Ravindra Rao, VP-Head Commodity Research at Kotak Securities.

The gold/silver ratio currently stands at 106.69 to 1, which means the amount of silver required to buy one ounce of gold.

Silver prices fell Rs 195 to Rs 43,005 per kg from its closing on May 11.

In the futures market, gold rate touched an intraday high of Rs 45,970 and an intraday low of Rs 45,710 on MCX.

For the June series, the metal touched a low of Rs 36,572 and a high of Rs 47,327.

On the MCX, gold futures for delivery in June slipped Rs 61, or 0.13 percent, trading at Rs 45,720 per 10 gram in the evening in a business turnover of 12,825 lots.

Contracts for August delivery lowered by Rs 79, or 0.17 percent, at Rs 45,927 per 10 gram in a business turnover of 7,870 lots.

The value of the June contract traded so far is Rs 2,692.38 crore and August contract saw the value of Rs 255.79 crore.

Similarly, Gold-Mini contract for June eased Rs 45, or 0.10 percent, at Rs 45,740 in a business turnover of 10,370 lots.

Patel expects prices to trade sideways for the day, with MCX Gold June support at Rs 45,700 and resistance at Rs 46,200.

MCX Gold is having support at Rs 45,550 level and intraday trend is likely to remain bullish as long as the support level is held up, according to Motilal Oswal.

The brokerage firm advised clients to buy on dips targeting higher resistance in Rs 46,000-46,200 zone.

The broking firm said spot gold will trade in the $1,690-1,720 range with a positive bias.

At 1217 GMT, spot gold was up by $6.08 at $1,703.53 an ounce in London trading.