Gold price rises to Rs 51,156/10 gm on rupee depreciation, silver jumps Rs 1,500 a kg

Gold prices climbed Rs 278 to Rs 51,156 per 10 gram in the Mumbai retail market on rupee depreciation and positive global cues. The precious metal, treated as a safe haven investment, gained on rising coronavirus cases globally and continuing uncertainty about a stimulus package by the United States government.

The rate of 10 gram 22-carat gold in Mumbai was Rs 46,859 plus 3 percent GST, while 24-carat 10 gram was Rs 51,156 plus GST. Meanwhile, 18-carat gold quoted at Rs 38,367 plus GST in the retail market.

“With the recent fall in prices, gold's risk-reward offer now looks even better. It is indeed a smart time to actually be buying the metal, not avoiding it. We suggest that investors use this correction to build their allocation to this monetary asset that has given near 25 percent returns in 2020. The macroeconomic realities facing the world today are going to ensure that gold will remain a preferred strategic asset now and for years to come,” said Chirag Mehta, senior fund manager (Alternative Investments), Quantum Mutual Fund.

With a raging pandemic, slow economic recovery, and political worries, investors hoping things might smooth out in the coming days might be in for disappointment, he said.

Spot gold was trading down $5.60 at $1,924.63 an ounce at 12:04 pm GMT in London trading.

Gold holdings in the SPDR ETF fell 4.09 tonnes to 1271.52 tonnes. 

According to US CFTC data, speculators in gold futures raised net long positions by a modest 2 percent after a 11.2 percent rise a week ago.

The US dollar index traded marginally higher at 93.20 or up 0.15 percent. The trend in the US dollar has been a key price-determining factor for gold in the last few days, with a focus on the expected stimulus.

MCX iCOMDEX Bullion Index inched higher 107.58 points, or 0.69 percent, at 15,739.99 at 5:36 pm. The index tracks the real-time performance of MCX Gold and MCX Silver futures.

COMEX gold traded moderately lower near $1926/oz. Weakness in the US dollar and persisting expectations of additional stimulus have supported gold prices. However, a slight rebound in the dollar in today’s session has erased the morning gains. ETF investors continue to remain on sidelines showing lack of investor buying interest. Choppy trades in gold are possible on uncertainty relating to the US stimulus”, said Ravindra Rao, vice president and head - Commodity Research, at Kotak Securities.

The gold/silver ratio currently stands at 81.71 to 1, which is the amount of silver required to buy one ounce of gold. 

Silver prices climbed Rs 1,500 to Rs 62,606 per kg from their close on October 9.

In the futures market, the gold rate touched an intraday high of Rs 51,142 and an intraday low of Rs 50,830 on the Multi-Commodity Exchange (MCX). For the December series, the yellow metal touched a low of Rs 48,384 and a high of Rs 56,379.

Gold futures for December delivery gained Rs 308, or 0.61 percent, to Rs 51,125 per 10 gram in evening trade on a business turnover of 15,275 lots. The same for February surged Rs 267, or 0.52 percent, to Rs 51,226 on a business turnover of 946 lots.

The value of the December and February’s contracts traded so far is Rs 2,481.76 crore and Rs 20.47 crore, respectively.

Similarly, Gold Mini contract for November edged higher Rs 322, or 0.63 percent at Rs 51,194 on a business turnover of 9,243 lots.

Trading strategy

Sriram Iyer, senior research analyst at Reliance Securities

International Gold and silver prices were weak in Monday evening trade in Asia as investors turned to the safe-haven appeal of the US dollar as talks over the latest US stimulus measures stalled.

Investors digested President Donald Trump’s $1.8-trillion-package proposal made last week during talks with House of Representatives Speaker Nancy Pelosi. 

Across the Atlantic, more uncertainty surrounding Brexit also pushed investors towards the safe haven appeal of the US dollar. 

Technically, LBMA Gold Spot on the daily chart is trading in Falling Channel formation where it is sustaining above resistance on the upper band which is placed at $1920 levels below which could see some downside pressure. However, if it sustains above its 21-Daily Moving Average which is placed at $1907, it will continue its bullish reversal. It could trade in a range of $1909-$1932 levels in coming sessions.

Domestic futures on MCX traded with gains this Monday evening trade.

Technically, MCX Gold October is sustaining above 65-Day Moving Average at Rs 50,750 which will be immediate support for further upside rally. However Rs 51,300 levels hold immediate resistance.

Tapan Patel, senior analyst (Commodities), HDFC Securities

Gold prices traded firm with COMEX spot gold prices trading near $1925 on Monday. Gold October future contract at MCX were trading half a percent up to Rs 51070 per 10 grams for the day supported by a weaker rupee.

Gold prices traded firm on lack of progress in finalizing US aid package which has raised concerns over US economic recovery. We expect gold prices to trade sideways to up for the day with COMEX gold resistance at $1940, support at $1915. MCX Gold October support lies at Rs 50,800 with resistance at Rs 51,500.

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