Gold prices drop by Rs 658 to Rs 50,683; silver rates fall to Rs 59,959 per kg

Gold prices slide by Rs 658 to hit Rs 50,683 per 10 gram in the Mumbai market on a strong dollar and subdued global cues. The precious metal prices decline on sharp dollar recovery as safe-haven buying switched to dollar with rising coronavirus cases and fear of another lockdown in Europe and the UK.

As the cases of people getting affected and people dying due to the pandemic are increasing, market participants are getting anxious about what steps and policy measures will be announced to curb the same.

The rate of 10 gram 22-carat gold in Mumbai was Rs 46,426 plus 3 percent GST, while 24-carat 10 gram was Rs 50,683 plus GST. The 18-carat gold quoted at Rs 38,012 plus GST in the retail market.

While the US dollar is seen as the preferred asset at present, gold may also benefit from safe-haven buying if global risks continue to intensify.

SPDR Gold holdings jumped by 19 tonnes to 1278.81 tonnes, highest since February 2013.

Investors now are keeping their eyes on the speeches of Fed officials and Governor Jerome Powell, who will appear before Congressional committees later this week.

MCX iCOMDEX Bullion Index eased 77.05 points, or 0.50 percent, at 15,383.06 at 17:21. The index tracks the real-time performance of MCX Gold and MCX Silver futures.

Sunilkumar Katke, Head of Commodities and Currency at Axis Securities Limited said, "Gold corrected from close to Rs 52,000 levels per 10 grams to current levels of Rs 50,300 backed by strengthening dollar and overall liquidation as a result of a possible 2nd wave across Europe that may lead to lockdown in patches again. The same also came as a part of profit booking from investors as the safe-haven appeal in the short term was reduced due to positivity in the market from recent US FOMC meeting outcomes."

“COMEX Gold trades flat near $1909/oz. Despite weaker risk sentiment amid concerns that Europe may reinstate lockdown to check the virus spread, gold trades lower as investors sought the safety of the US dollar. Gold may witness choppy trade along with other commodities as market clarity is needed on possible lockdowns in European countries. However, we expect buying to emerge at lower levels as concerns about the US economy may limit upside in US dollar,” said Ravindra Rao, VP- Head Commodity Research at Kotak Securities.

The gold/silver ratio currently stands at 84.52 to 1, which means the amount of silver required to buy one ounce of gold.

Silver prices declined by Rs 4,182 to Rs 59,959 per kg from its closing on September 21.

In the futures market, the gold rate touched an intraday high of Rs 50,686 and an intraday low of Rs 50,129 on the Multi-Commodity Exchange (MCX). For the October series, the yellow metal touched a low of Rs 45,596 and a high of Rs 56,191.

Gold futures for October delivery slipped Rs 163, or 0.32 percent, at Rs 50,308 per 10 gram in evening trade on a business turnover of 8,022 lots. The same for December eased Rs 170, or 0.34 percent, at Rs 50,470 on a business turnover of 10,129 lots.

The value of the October and December contracts traded so far is Rs 3,180.25 crore and Rs 389.51 crore, respectively.

Similarly, Gold Mini contract for October fell Rs 137, or 0.27 percent at Rs 50,375 on a business turnover of 12,447 lots.

Katke expects a short term correction in gold prices and advises a sell around Rs 50,500 levels with a stop loss around Rs 50,800 and a target of Rs 50,000-49,800 during the day MCX.

At 1207 (GMT), spot gold was down $8.58 at $1,903.62 an ounce in London trading.