Traders may be waiting for the FOMC meeting outcome but the general bias may be lower as gold will likely struggle to maintain momentum amid weakening investor interest.
Gold prices rose by Rs 365 to Rs 46,844 per 10 gram in the Mumbai bullion market on a depreciating rupee and weaker equity markets. The yellow metal also gained ahead of two-day federal open market committee (FOMC) meeting that begins later on June 9.
The rate of 10 gram 22-carat gold in Mumbai was Rs 42,909 plus 3 percent GST, while 24-carat 10 gram was Rs 46,844 plus GST. The 18-carat gold quoted at Rs 35,133 plus GST in the retail market.
According to Navneet Damani, Vice President, Motilal Oswal, gold inched higher as the US dollar hovered near a three-month low and amid fears of a deep economic fallout from the coronavirus crisis. The pandemic will cause the global economic output to contract by 5.2 percent in 2020, the World Bank said on June 8, adding its latest forecasts would be revised downward if uncertainty and shutdowns persisted.
During the day, the focus would be on the GDP number expected from the EU that will give a further understanding of the impact of COIVD-19 on the economy. The broader trend on Comex could be in the range of $1,680-1,710 and on the domestic front, prices could hover in the Rs 45,850-46,350 range.
Ravindra Rao, VP-Head, Commodity Research, Kotak Securities, said equity markets seem to be losing momentum. European equity markets were down over 1 percent while DJIA futures were down over 300 points.
Traders might be waiting for the FOMC meeting outcome but the general bias might be lower as gold could struggle to maintain momentum amid weakening investor interest.
The gold/silver ratio currently stands at 98.21 to 1, which means the amount of silver required to buy one ounce of gold.
Silver prices fell Rs 105 to Rs 47,695 per kg from its closing on June 8.
In the futures market, gold touched an intraday high of Rs 46,491 and an intraday low of Rs 45,950. On the Multi-Commodity Exchange (MCX), for the August series, the yellow metal touched a low of Rs 39,200 and a high of Rs 48,190.
Gold futures for August delivery gained Rs 244, or 0.53 percent, at Rs 46,345 per 10 gram in evening trade on a business turnover of 14,149 lots. The same for October delivery rose Rs 249, or 0.54 percent, at Rs 46,529 on a business turnover of 5,476 lots.
The value of the August and October contracts traded so far is Rs 3,388.73 crore and Rs 75.67 crore, respectively.
Similarly, the Gold-Mini contract for July was up Rs 222, or 0.48 percent, at Rs 46,332 on a business turnover of 10,651 lots.
MCX Gold has immediate resistance at Rs 46,530 and price sustained break above the same will target Rs 45,700-45,835, according to Motilal Oswal. The brokerage firm advised its clients to buy above resistance for the day with support placed at Rs 46,270-46,130.
The broking firm said spot gold has support at $1,700-1,692 and resistance is at $1,720-1,727 levels.
At 1209 GMT, spot gold gained $6.36 at $1,704.93 an ounce in London trading.
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