Gold prices edge higher for fifth day to Rs 50,308 per 10 gm; silver jumps Rs 673 a kg

Gold prices continued their northward march for the fifth straight day by Rs 200 to Rs 50,308 per 10 gram in the Mumbai retail market on rupee depreciation and volatile global cues. The precious metal price pared earlier gains tracking rebounding dollar on safe-haven appeal as a new coronavirus strain in Britain led to sell-off in most assets class.

The rate of 10 gram 22-carat gold in Mumbai was Rs 46,082 plus 3 percent GST, while 24-carat 10 gram was Rs 50,308 plus GST. The 18-carat gold quoted at Rs 37,731 plus GST in the retail market.

Speculators raised their net long COMEX gold futures and options positions by 1,091 contracts to 127,828 contracts in the week to December 15, according to US CFTC data.

The US dollar trades firm at 90.59, or up 0.71 percent in the evening session against a basket of currencies. Weaker risk sentiment improved the dollar’s safe-haven demand and helped it recover from April 2018 lows set last week.

Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, were unchanged at 1,167.82 tonnes.

Spot gold was steady at $1,881.30 an ounce at 1210 GMT in London trading.

MCX Bulldesk soared 156 points, or 1 percent, at 15,830 at 17:40. The index tracks the real-time performance of MCX Gold and MCX Silver futures.

Navneet Damani, Vice President, Motilal Oswal, said, “Gold continues to rally as investors cheered news that a US fiscal stimulus deal was likely to be passed, although gains were capped by a strong dollar. US congressional leaders have reached an agreement on a $900 billion package to provide the first new aid in months to the coronavirus-hit economy, and the Senate's top Republican and Democrat said that vote is likely on Monday.”

The broader trend on COMEX could be in the range of $1880- 1825 and on the domestic front, prices could hover in the range of Rs 50,400- 51,100.

“COMEX gold trades higher near $1900/oz on back of safe-haven buying amid renewed virus concerns after the UK’s discovery of a new variant of coronavirus. The price is also supported by increased US-China tensions over blacklisting of some Chinese firms, prolonged UK-EU Brexit negotiations and progress on US fiscal stimulus deal. However, weighing on price is a recovery in the US dollar from recent lows, vaccine progress and continuing ETF outflows. Gold has rescaled $1900/oz and we may see some extended gains if it sustains above $1900,” said Ravindra Rao, VP- Head Commodity Research, at Kotak Securities.

The gold/silver ratio currently stands at 74.87 to 1, which means the amount of silver required to buy one ounce of gold.

Silver prices climbed by Rs 673 to Rs 67,192 per kg from its closing on December 18.

In the futures market, the gold rate touched an intraday high of Rs 51,009 and an intraday low of Rs 49,712 on the Multi-Commodity Exchange (MCX). For the February series, the yellow metal touched a low of Rs 41,560 and a high of Rs 57,100.

Gold futures for February delivery rose by Rs 246, or 0.49 percent, at Rs 50,550 per 10 gram in evening trade on a business turnover of 11,280 lots. The same for April jumped Rs 258, or 0.51 percent, at Rs 50,607 on a business turnover of 1,867 lots.

The value of the February and April’s contracts traded so far is Rs 5,674.57 crore and Rs 137.15 crore, respectively.

Similarly, Gold Mini contract for January soared Rs 152, or 0.30 percent at Rs 50,252 on a business turnover of 11,594 lots.

Trading Strategy

Tapan Patel- Senior Analyst (Commodities), HDFC Securities

We expect gold prices to trade sideways to up with COMEX gold has resistance at $1910 and support at $1880. MCX Gold February support lies at Rs 50,200 with resistance at Rs 51,200.

Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited

Technically, spot gold has entered near 100-DMA at $1,900 where it is trading with increased momentum. Gold has a resistance placed at $1,909-1,920 levels whereas support is at $1,895-1,881 levels. For the evening session, prices may take a correction and test the levels of Rs 50,500-50,450 on the downside.

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