Gold prices surge close to Rs 50,000 per 10 gram on weak dollar, silver climbs Rs 696 a kg

Gold prices rose Rs 144 to Rs 49,995 per 10 gram in the Mumbai retail market on a softer dollar and positive global cues. The precious metal gained on optimism surrounding the US stimulus but the upside was capped by strength in the rupee.

The rate of 10 gram 22-carat gold in Mumbai was Rs 45,795 plus 3 percent GST, while 24-carat 10 gram was Rs 49,995 plus GST. The 18-carat gold quoted at Rs 37,496 plus GST in the retail market.

US Labour Department reported that claims for state unemployment benefits dropped to 89,000 to a seasonally adjusted 803,000 for the week ended December 19.

The US dollar traded weaker at 90.16, down 0.19 percent in the evening session against a basket of currencies. The US dollar fell as risk appetite rose on expectations of an imminent Brexit trade deal between the UK and the EU.

Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund were unchanged at 1,167.52 tonnes.

Spot gold was flat at $1,873.24 an ounce at 1216 GMT in London trading.

MCX Bulldesk was down 20 points, or 0.13 percent, at 15,594 at 17:47. The index tracks the real-time performance of MCX Gold and MCX Silver futures.

Navneet Damani, Vice President, Motilal Oswal said, “Gold prices steadied as investors balanced elevated US jobless claims that undermined a nascent economic recovery with US President Donald Trump's threat to veto a long-awaited stimulus bill. President Trump demanded lawmakers change the coronavirus aid part of the spending bill to include $2,000 payments to each American, more than triple the $600 per person provided. Millions of COVID-19 vaccines are sitting unused in US hospitals and elsewhere, putting the government's target for 20 million vaccinations this month in doubt as pandemic cases in the country top 18 million. 

The broader trend on COMEX could be in the range of $1860- 1895 and on domestic front prices could hover in the range of Rs 49,850- 50,450.”

“COMEX gold trade higher near $1883/oz supported by weakness in the US dollar amid mixed US economic data and reduced safe-haven buying. Also supporting price is hopes of an eventual US stimulus deal. However, weighing on price is weaker investor interest and continuing progress on the vaccine front. Gold may remain choppy amid mixed cues however a sustained up move may come only once the US finalizes the stimulus deal”, said Ravindra Rao, VP- Head Commodity Research at Kotak Securities.

The gold/silver ratio currently stands at 75.21 to 1, which means the amount of silver required to buy one ounce of gold.

Silver prices soared Rs 696 to Rs 66,431 per kg from its closing on December 23.

In the futures market, the gold rate touched an intraday high of Rs 50,186 and an intraday low of Rs 49,943 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 slipped Rs 179, or 0.36 percent, at Rs 49,970 per 10 gram in evening trade on a business turnover of 10,388 lots. The same for April slides Rs 132, or 0.26 percent, at Rs 50,016 on a business turnover of 2,443 lots.

The value of the February and April’s contracts traded so far is Rs 2,047.79 crore and Rs 42.10 crore, respectively.

Similarly, Gold Mini contract for January eased Rs 183, or 0.37 percent at Rs 49,726 on a business turnover of 10,762 lots.

Trading Strategy

Tapan Patel- Senior Analyst (Commodities), HDFC Securities

Gold prices gained on dollar decline after a previous volatile session. The pandemic concerns over a new strain of coronavirus and increase lockdowns have also lifted gold prices from the support levels. The imposed lockdowns and pandemic fears may keep risk premium high in gold prices. 

We expect gold prices to trade sideways to up with COMEX gold resistance at $1,890, support at $1,860. MCX Gold February support lies at Rs 49,800 with resistance at Rs 50,400.

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

Technically, spot gold prices are trading in the range of $1,875-1,885. Prices may rise in the upcoming sessions provided there is an increase in volume. Gold has a resistance placed at $1,885-1,900 levels. On the MCX Gold is trading in a sideways range. A breakout below Rs 50,000 levels may initiate a bear move with support placed at Rs 49,800-49,900 whereas resistance is at Rs 50,200-50,300.

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