Yellow metal prices flat at Rs 52,420/10 gm, gold futures tank over Rs 1,000 on positive COVID vaccine data

Gold prices fell marginally by Rs 53 to Rs 52,420 per 10 gram in the Mumbai retail market on the strength of the United States dollar and sluggish global cues. The precious metal had gained 3.21 percent the previous week in the domestic market.

The rate of 10 gram 22-carat gold in Mumbai was Rs 48,017 plus 3 percent GST, while 24-carat 10 gram was Rs 52,420 plus GST. The 18-carat gold quoted at Rs 39,315 plus GST in the retail market.

"Gold has always been integral to festivals and celebrations in India, particularly so during Dhanteras, Diwali, and the ensuing wedding season. Millions of Indians believe that purchasing gold during the auspicious occasion of Dhanteras will usher in good fortune and wealth. Reflecting this sentiment, this year, Dhanteras is likely to mark the onset of a modest buying period, providing some respite after a prolonged phase of suppressed demand and subdued activity due to current pandemic," said Somasundaram PR, managing director, India, World Gold Council.

"A part of this latent demand is expected to resurface, although lifetime-high prices and the shadow of COVID will continue to impact overall sentiment and lead to a 'wait-and-watch' approach by the consumers," he said.

Suvankar Sen, chief executive officer, Senco Gold and Diamonds said, "This Dhanteras, we are expecting similar sales levels in value terms as last year. In volume terms, there might be a 15-20 percent decrease compared to last year. The pandemic and the subsequent rise in gold prices has reinforced customers' trust in gold as an asset class.”

We should get back to pre-COVID levels once there is stability in the market and more certainty in people's minds. Bridal jewellery is doing well since it's an Indian tradition of buying jewellery for the wedding. Also, designs that look heavy but weigh lighter, and daily wear jewellery in diamonds and platinum are doing well, he said

Sen added that market sentiments have improved substantially since Durga Puja and Navratri. People are doing advance bookings of jewellery for the festive season.

The US dollar trades firm at 92.29, or up 0.08 percent in the evening session against a basket of currencies. The greenback has lost 1.93 percent last week.

The US unemployment rate dropped to 6.9 percent in October 2020, from the previous month's 7.9 percent and compared with market expectations of 7.7 percent, as the number of unemployed persons fell by 1.5 million to 11.1 million and the employment rose by 2.2 million to 149.8 million.

Spot gold was trading down at $26.10 at $1,925.11 an ounce at 1204 GMT in London trading.

MCX iCOMDEX Bullion Index dropped 256.43 points, or 1.59 percent, at 15,836.27 at 3:38. The index tracks the real-time performance of MCX Gold and MCX Silver futures.

Navneet Damani, vice president, Motilal Oswal said, “Gold prices edged higher in the early morning session, propped up by a weaker dollar and hopes of more stimulus measures under US President-elect Joe Biden. Biden and his advisers are working on plans to tackle the crises facing a divided America, first and foremost the raging pandemic. With the possibility of divided government I.e. with Republicans in control of the Senate may mean a smaller fiscal stimulus package, but that could put the Fed in spotlight for supporting the economy.”

Sriram Iyer, senior research analyst at Reliance Securities, said that "international and domestic gold prices corrected from the highs of the session after Pfizer and German partner BioNTech said its experimental COVID-19 vaccine was more than 90 percent effective."

"Markets were higher in the Monday morning and afternoon trade trade as the US Dollar was weak as Biden’s win in the U.S. presidential race rekindled hopes of more monetary stimulus measures to revive an economy," he said.

Technically, LBMA Gold Spot retreated from resistance zone $1965-$1971 levels from where it has given a sharp fall more than 2 percent losses. Downside could see $1896-$1874 levels. Resistance is at $1920-$1938 levels, according to Iyer.

The broader trend on COMEX could be in the range of $1900-1985 and on domestic front prices could hover in the range of Rs 51,900-52,750.

The gold/silver ratio currently stands at 79.36 to 1, which is the amount of silver required to buy one ounce of gold.

Silver prices jumped Rs 207 to Rs 66,052 per kg from its closing on November 6.

In the futures market, the gold rate touched an intraday high of Rs 52,520 and an intraday low of Rs 50,677 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 declined Rs 1,096, or 2.10 percent, at Rs 51,071 per 10 gram in evening trade on a business turnover of 11,717 lots. The same for February edged lower Rs 1,137, or 2.17 percent, at Rs 51,200 on a business turnover of 4,124 lots.

The value of the December and February’s contracts traded so far is Rs 5,813.99 crore and Rs 489.61 crore, respectively.

Similarly, Gold Mini contract for December slipped Rs 967, or 1.87 percent at Rs 51,223 on a business turnover of 10,873 lots.

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