Gold prices flat at Rs 50,989/10 gm, IBJA says sales in south India back to normal levels

Gold prices fell marginally (Rs 54) to Rs 50,989 per 10 gram in the Mumbai retail market on a firm dollar and weak global cues. The precious metal has been trading in a narrow range for the last few weeks as the dollar ticked higher, with investors awaiting next week’s US Presidential election and lack of progress on a stimulus package.

The dollar trades trade firm at 93.59, up 0.72 percent, against a basket of major currencies on safe-haven buying.

US President Donald Trump said the relief bill might come after the elections, further pressurising gold prices.

A fresh wave of infections has forced many countries, including Russia and France, to impose new restrictions, risking derailing any global economic recovery. This is keeping metal prices supported at lower levels.

Markets will now look ahead to a televised address by French President Emmanuel Macron later today (October 28) as authorities explore restrictions to curb the spread of the coronavirus.

The China Gold Association said the country’s gold consumption rose 28.7 percent for the July-September period from the previous quarter supported by a stabilising economy and swift recovery of the wedding market.

Spot gold was trading down $29.37 at $1,878.70 an ounce at 12:44 GMT in London trading.

Gold holdings in SPDR ETF rose 2.9 tonne to 1266.71 tonne, the first increase since October 19. 

The rate of 10 gram 18, 22 and 24-carat gold in Mumbai was Rs 38,242, Rs 46,706 and Rs 46,706, respectively, plus 3 percent GST. 

Surendra Mehta, National Secretary, India Bullion and Jewellers Association, told Moneycontrol, “Sale of gold jewellery is gradually picking up, with south India recovering up to 80 percent as compared to last year. In north and west India, business is still sluggish, with a recovery of about 45-50 percent. That said, sales are likely to return to normal by Diwali.”

MCX iCOMDEX Bullion Index fell 233.85 points, or 1.5 percent, at 15,397.81 at 18:15 hours. The index tracks the real-time performance of MCX Gold and MCX Silver futures.

Ravindra Rao, VP-Head Commodity Research, Kotak Securities, expects gold to witness choppy trade as uncertainty relating to US stimulus may keep the dollar directionless.

Navneet Damani, Vice President, Motilal Oswal, sees domestic prices hovering in the Rs 50,700-51,200 range. 

The gold-to-silver ratio currently stands at 83 to 1, which means the amount of silver required to buy one ounce of gold.  Silver prices dropped Rs 561 to Rs 61,430 per kg from its closing on October 27.

In the futures market, the gold rate touched an intraday high of Rs 51,065 and a low of Rs 50,331 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 slipped Rs 516, or 1.01 percent, at Rs 50,445 per 10 gram in evening trade on a business turnover of 13,689 lots. The same for February delivery edged lower by Rs 506, or 0.99 percent, to Rs 50,550 on a business turnover of 2,132 lots.

The value of the December and February’s contracts traded so far is Rs 4,645.08 crore and Rs 95.79 crore, respectively.

Similarly, Gold Mini contract for November eased Rs 506, or 0.99 percent, at Rs 50,478 on a business turnover of 5,578 lots.

Trading strategy

International Gold prices were trading below the $1,900 mark on early Wednesday evening trade in Asia as uncertainties about the US elections and surging global COVID-19 cases offset pressure from a firmer dollar and fading hopes of an immediate US stimulus package.

Technically, LBMA Gold Spot is trading on a flat note where it is struggling near 21-DMA which is placed at $1,903, below which could see downside pressure up to $1,888-$$1,872 levels. Resistance is at $1,910-$1,918 levels. Gold could trade in a range of $1,880-$1,909 levels for the rest of the session.

Domestic gold prices were trading marginally weak on early Wednesday evening trade, tracking overseas prices. Technically, MCX Gold December futures were unable to sustain above Rs 51,000 levels. Immediate support is near 65-DMA at Rs 50,700 levels. Below Rs 51,000 level will continue its sideways to marginal downside momentum in coming sessions. Support is at Rs 50,700-50,400 and resistance Rs 51,000-51,200 levels.

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