Gold prices extended decline for the third consecutive session on March 3. The price of the yellow metal fell by Rs 292 to Rs 45,217 per 10 gram in the Mumbai retail market on sharp appreciation in rupee and a rally in the equity market. The precious metal traded under pressure as US Treasury continued uptrend and increased appetite for risky assets on stimulus hope diminished safe haven appeal.
The bullion prices have dropped by Rs 1,353 or 2.90 percent in the first three days of March in the domestic market.
The rupee has appreciated 1.4 percent to 72.89 from the 2021 low of 73.92 it touched on February 26.
The rate of 10 gram 22-carat gold in Mumbai was Rs 41,419 plus 3 percent GST, while 24-carat 10 gram was Rs 45,217 plus GST. The 18-carat gold quoted at Rs 33,913 plus GST in the retail market.
Market participants are likely to keep an eye on the Services PMI data expected from major economies; focus will also be on the private payroll number from the US which could give us clarity on the non-farm payroll number scheduled on Friday.
The 10-year US T-bond yield surged nearly 2 percent to 1.44. The rise in yield dented non-yielding bullion’s appeal.
The US dollar trades higher at 90.97, or up 0.20 percent against a basket of six rival currencies.
Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, increased by 2.6 tonnes to 1,087.12 tonnes, the first rise since February 4.
Spot gold was marginally higher by $3.94 to $1,728.93 an ounce at 12:22 GMT in London trading.
MCX Bulldesk eased 25 points or 0.17 percent, at 14,470 at 17:47 IST. The index tracks the real-time performance of MCX Gold and MCX Silver futures.
Navneet Damani, Vice President, Motilal Oswal said, “Gold prices traded higher in the early morning session, inching up from a more than eight-month low, as a retreat in the dollar and US Treasury yields lifted demand for the safe-haven metal. Benchmark US Treasury yields dipped for a fourth straight day after jumping to a one-year high last week. Investors now await developments in a $1.9 trillion US stimulus bill passed by the House of Representatives last week, as the Senate begins debate over the legislation this week.”
The broader range on COMEX could be between $1690- $1755 and on the domestic front, prices could hover in the range of Rs 45,050- Rs 45,670.
The gold/silver ratio currently stands at 66.57 to 1, which means the number of silver ounces required to buy one ounce of gold.
Silver prices rose by Rs 566 to Rs 67,919 per kg from its closing on March 2.
In the futures market, the gold rate touched an intraday high of Rs 45,544 and an intraday low of Rs 45,003 on the Multi-Commodity Exchange (MCX). For the April series, the yellow metal touched a low of Rs 44,975 and a high of Rs 51,931.
Gold futures for April delivery declined by Rs 468, or 1.03 percent, at Rs 45,080 per 10 gram in evening trade on a business turnover of 13,678 lots. The same for June slipped Rs 494, or 1.08 percent, at Rs 45,255 on a business turnover of 3,744 lots.
The value of the April and June’s contracts traded so far is Rs 2,443.93 crore and Rs 117.19 crore, respectively.
Similarly, Gold Mini contract for April edged lower by Rs 465, or 1.02 percent at Rs 45,110 on a business turnover of 29,322 lots.
Trading Strategy
Tapan Patel, Senior Analyst (Commodities), HDFC Securities
Gold prices traded weak on Wednesday despite a fall in US bond yields. The 10-year treasury yields fell for the fourth day providing some support to precious metals. The dollar index was trading firm limiting upside in the yellow metal.
We expect gold prices to trade sideways to down for the day with COMEX spot gold support is seen at $1,710 and resistance at $1,740. MCX Gold April support lies at Rs 44,900 and resistance is seen at Rs 45,500.
Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited
International Gold prices have been trading below the major support levels of $1,770.75-$1,760.65. The price is making lower lows and crossed 15-SMA on the downside during the afternoon session. We may witness prices to test new support levels in the range of $1,710-$1,700 and on the upside prices may get challenged in the range of $1,740-$1,750 levels. MCX gold has been trading with negative bias with support placed at Rs 45,000-Rs 44,900 levels. A minor rise in prices could be witnessed in the upcoming session where levels of Rs 45,250-Rs 45,300 could be tested after which bearish momentum is likely to continue.
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