Gold surges above Rs 51,000/10 gm to record high, gains 4% for the week

Gold prices climbed Rs 421 to Rs 51,124 per 10 gram to hit another fresh high in the Mumbai bullion market on rupee depreciation versus the dollar and deteriorating relationship between the US and China. The bullion metal has risen Rs 1,979, or 4.02 percent, this week though retail demand has remained muted due to high prices.

The rate of 10 gram 18, 22 and 24-carat gold in Mumbai was Rs 38,343, Rs 46,830 and Rs 51,124, respectively, plus 3 percent GST.

Gold and silver put up a great showing this week - undoubtedly the best week in more than three months, driven by an escalation in US-China tensions, with investors also looking for a hedge against possible inflation as hopes for more stimulus measures grow.

The precious metal price is only $25 away from touching its record high in dollar terms.

China said the US move to close its Houston consulate this week had 'severely harmed' relations and warned it 'must' retaliate, without providing details of what it would do.

In other news, US Senate Republicans will unveil their proposal for a fresh round of coronavirus aid next week, including more direct payments to Americans.

Ravindra Rao, VP- Head Commodity Research at Kotak Securities, said, “The rally seems to losing steam as it is approaching near its 2011 highs of $1,920. We can't rule out bouts of profit booking as the price reach all-time highs. But the undertone remains bullish and buying might re-emerge at lower levels.”

Navneet Damani, Vice President, Motilal Oswal, said the broader trend on the COMEX could be in the range of $1,860-1,920. "On the domestic front, prices could hover in the range of Rs 50,430- 51,200.”

The gold-to-silver ratio currently stands at 85.37 to 1, which means the amount of silver required to buy one ounce of gold.

Silver prices declined Rs 900 to Rs 59,885 per kg from its closing on July 23. The white metal has outperformed gold this week gaining Rs 8,145, or 15.74 percent.

In the futures market, gold touched an intraday high of Rs 50,948 and a low of Rs 50,570 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 50,948.

Gold futures for August delivery gained Rs 150, or 0.30 percent, at Rs 50,850 per 10 gram in evening trade on a business turnover of 5,503 lots. The same for October delivery edged higher Rs 155, or 0.30 percent, at Rs 51,118 on a business turnover of 13,990 lots.

The value of the August and October contracts traded so far is Rs 3,442.72 crore and Rs 790.48 crore, respectively.

Similarly, Gold Mini contract for August rose Rs 154, or 0.30 percent at Rs 50,916 on a business turnover of 8,675 lots.

Gold is expected to trade positive with support at Rs 50,500 and Rs 50,700 levels, according to Motilal Oswal. The brokerage advised its clients to buy on dips targeting higher resistance at Rs 51,000-51,250 zone.

At 12:14 (GMT), spot gold was up $6.78 at $1,894.29 an ounce in London trading.