Gold rises Rs 428 to Rs 46,322 per 10 gram on safe-haven demand, silver gains

Gold prices rose Rs 428 to Rs 46,322 per 10 gram in the Mumbai bullion market on rupee depreciation. The precious metal gained after US Federal Reserve Chairman Jerome Powell had warned of an extended recession and talked about further stimulus-boosted safe-haven demand.

The rate of 10 gram 22-carat gold in Mumbai was Rs 42,430 plus 3 percent GST while 24-carat 10 gram was Rs 46,322 plus GST. The 18-carat gold quoted at Rs 34,742 plus GST in the retail market.

Ravindra Rao, VP - Head Commodity Research at Kotak Securities, said COMEX gold traded higher near $1725/oz as risk-off had turned investors again towards the shiny metal. Weaker risk sentiment is evident from losses in European equity markets while DJIA futures are mixed. Weighing on market sentiment are concerns that the virus outbreak may not be over soon. Weaker economic data, downbeat forecasts and US-China tensions have also dampened risk appetite.

Rao further added although gold is trading higher it is still bound in the $1,700-$1,735 range (near term) and this was expected to continue until there were fresh triggers to push gold higher above $1,735.

According to Navneet Damani, Vice President - Motilal Oswal, Gold inched higher as US stimulus talks and Fed Governor Jerome Powell's downbeat economic assessments supported the safe-haven metal. Powell has signalled bets that the pursuit of the US central bank for a negative interest-rate policy are off-base but vowed to use its power as needed and called for additional fiscal spending to prop up the virus-hit economy.

Market participants will keep an eye on the weekly jobless claims number scheduled later in the day. Highlighting investor appetite for bullion, SPDR Gold Trust holdings, the world's largest gold-backed exchange-traded fund, rose 0.78 percent to 1,092.14 tonnes on Wednesday.

The broader trend on COMEX could be in the range of $1690-1730 and on domestic front prices could hover in the range of Rs 45,790-46,350.

The gold/silver ratio currently stands at 107.76 to 1, which means the amount of silver required to buy one ounce of gold.

Silver prices gained Rs 70 to Rs 42,985 per kg from its closing on May 13.

In the futures market, gold rate touched an intraday high of Rs 46,266 and an intraday low of Rs 46,062 on MCX. For 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 199, or 0.43 percent on the MCX trading at Rs 46,180 per 10 gram in evening trade in a business turnover of 13,540 lots. Gold contracts for August delivery jumped Rs 192, or 0.42 percent, at Rs 46,368 per 10 gram in a business turnover of 8,563 lots.

The value of the June contract traded so far is Rs 2,106.31 crore and August contract saw the value of Rs 181.75 crore.

Similarly, Gold Mini contract for June rose Rs 165, or 0.36 percent at Rs 46,148 in a business turnover of 11,940 lots.

Tapan Patel, Senior Analyst (Commodities) - HDFC Securities, said prices to trade sideways for the day with MCX Gold June support at Rs 45,800 and resistance at Rs 46,500.

MCX Gold is expected to trade positively with support at Rs 46,000 level and intermediate support at Rs 46,130, according to Motilal Oswal. The brokerage firm advised its clients to buy on dip targeting higher resistance at Rs 46,400-46,650 zone.

The broking firm said spot gold to trade in a range of $1,700-1,745 range.

At 12:10 pm (GMT), spot gold was down by $3.95 at $1,712.57 an ounce in London trading.