Gold prices fell for the fourth straight day by Rs 105 to Rs 47,161 per 10 gram at the Mumbai retail market on Fed’s hawkish stance despite a recovery in global market and dollar index stalled near at 10 week high. The precious metal declined Rs 1,762 or 3.59 percent last week in the domestic.
The rate of 10 gram 22-carat gold in Mumbai was Rs 43,199 plus 3 percent GST, while 24-carat 10 gram was Rs 47,161 plus GST. The 18-carat gold quoted at Rs 35,371 plus GST in the retail market.
The yellow metal has been weighed down by Fed concerns over increased inflation and raised GDP forecast and the time frame on when it will next raise interest rates.
The economic calendar is muted for the day, although investors will keep an eye on the preliminary Manufacturing and Service PMI data expected from major economies scheduled later this week.
The US dollar dropped to 92.09, down 0.13 percent against a basket of six rival currencies. The dollar index last week rallied by 1.84% to 92.23 lowering demand for safe-haven assets.
Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund rose by 11.07 tonnes to 1,053.06 tonnes. The ETF has a market value of $60.01 billion.
Spot gold climbed $11.07 to $1,775.40 an ounce at 1238 GMT in London trading.
MCX Bulldesk modestly soared 11 points or 0.08 percent, at 14,463 at 18:03. The index tracks the real-time performance of MCX Gold and MCX Silver futures.
“Gold prices edged higher after posting a 6% drop; the biggest weekly loss in 15 months as a retreat in U.S. Treasury yields boosted the appeal of the safe haven metal. Bullion has been weighed down by concerns over increased inflation and GDP forecast and tighter monetary policy although the market is also realizing that the monthly QE program is still going on and any change in interest rate is suggested after 2 years,” said Navneet Damani, VP – Commodities Research at Motilal Oswal Financial Services.
“A cautious approach is advised amidst the speeches expected from Fed officials this week, and speech from Governor Powell is due tomorrow to testify at a hearing on the Fed’s pandemic emergency lending and its asset purchase programs”, he added.
The broader range on COMEX could be between $1760-1808 and on the domestic front prices could hover in the range of Rs 46,750- 47,400.
“COMEX gold trades modestly higher near $1782/oz amid choppiness in the US dollar and drop in US bond yields to March lows. ETF inflows also show buying interest in the metal. However, weighing on price is the Fed's projection of early rate hikes. Gold has turned choppy after the recent sell-off however general bias may be on the downside unless the US dollar corrects sharply,” said Ravindra Rao, CMT, EPAT, VP- Head Commodity Research at Kotak Securities.
The gold/silver ratio currently stands at 69.43 to 1, which means 69.43 ounces of silver is required to buy an ounce of gold.
Silver prices slumped by Rs 765 to Rs 67,922 per kg against its closing price on June 18.
In the futures market, the gold rate touched an intraday high of Rs 47,083 and an intraday low of Rs 46,633 on the Multi-Commodity Exchange (MCX). For the August series, the yellow metal touched a low of Rs 44,501 and a high of Rs 49,721.
Gold futures for August delivery gained Rs 117, or 0.25 percent, to Rs 46,845 per 10 gram in evening trade on a business turnover of 11,039 lots. The same for October rose Rs 87, or 0.18 percent, to Rs 47,136 on a business turnover of 3,489 lots.
The value of August and October’s contracts traded so far is Rs 1,836.36 crore and Rs 81.15 crore, respectively.
Similarly, Gold Mini contract for July surged Rs 106, or 0.26 percent at Rs 46,715 on a business turnover of 15,740 lots.
Trading Strategy
Axis Securities
MCX Gold has seen positive divergence after strong selling, price is expected to trade positively. Any breakout above Rs 47,100 would push the price higher towards Rs 47,350-47,500 levels in intraday.
Axis Securities
The hourly momentum indicator RSI is trading at 47 and it is forming higher highs with positive divergence which shows bullishness in the prices.
Tapan Patel- Senior Analyst (Commodities), HDFC Securities
Gold prices witnessed recovery on Monday after reporting the worst weekly decline in 15 months. The yellow metal was supported by a fall in US treasury yields despite the firm dollar. The 10 year US treasury yields fell to 1.43% to the lowest since 3rd March 2021. Earlier, Gold prices fell after US FED hinted hawkish stance by 2023 which boosted buying in the dollar.
We expect gold prices to trade sideways to up for the day with COMEX gold support at $1,760 and resistance at $1,800 per ounce. MCX Gold August support lies at Rs 46,700 and resistance at Rs 47,300 per 10 gram.
Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited
Technically, International gold is trading with marginal bullish momentum above support of $1,760-1,770 levels and may continue to rise till $1,800 levels. On the domestic front, MCX August Gold has tested the support of Rs 46,800-46,600 levels. We may expect prices to rise and test Rs 47,250 levels in the evening session.