Gold prices fell marginally by Rs 128 to Rs 47,459 per 10 gram at the Mumbai retail market on a sharp recovery in rupee and increased appetite for risky assets. The precious metal marginally rose in the global market on the decline in US dollar and Treasury yields.
The rate of 10 gram 22-carat gold in Mumbai was Rs 43,472 plus 3 percent GST, while 24-carat 10 gram was Rs 47,459 plus GST. The 18-carat gold quoted at Rs 35,594 plus GST in the retail market.
The bullion metal eked out small gains for a second straight week in a choppy trading week and sharp depreciation in the rupee. It also got support from rising cases of Delta variant of coronavirus in the UK and other parts of the world leading to partial lockdowns.
Sriram Iyer, Senior Research Analyst at Reliance Securities said, “Gold had found some support as many investors had expected a bigger upside surprise to the jobs data and despite a better than expected number we feel it is unlikely to trigger a rush from the Fed to ease stimulus or begin interest rate hikes.”
However, the focus will be on Fed monetary policy meeting minutes where a reaffirmation of a hawkish stance will keep upside limited. Across the Atlantic, UK June PMI and GDP data and Germany’s ZEW Economic for July could have a small impact on price, he added.
The US CFTC data showed that money managers decreased their net long positions by 3647 lots in last week.
The Commerce Department reported that factory orders surged 1.7 percent in May after declining 0.1 percent in April. Expectations had forecast factory orders rebounding 1.6 percent.
The US dollar traded lower at Rs 92.25, down 0.17 percent against a basket of six rival currencies. The weaker greenback makes bullion metal attractive for other currency holders.
Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund fell by 0.57 tonnes to 1,042.58 tonnes. The ETF has a market value of $59.84 billion.
Spot gold modestly jumped by $4.37 to $1,791.72 an ounce at 1240 GMT in London trading.
MCX Bulldesk marginally gained 4 points or 0.03 percent, at 14,669 at 18:12. The index tracks the real-time performance of MCX Gold and MCX Silver futures.
“Gold prices edged higher amidst a fall in the dollar and rising fears regarding Covid variants. A stronger than expected U.S. non-farm payroll was reported strengthening the optimism regarding economic recovery although unemployment rate on other hand rose to 5.9% against expectations of 5.6%. Japan's service sector activity shrank for the 17th straight month in June as the coronavirus dampened demand at home and abroad,” said Navneet Damani, VP – Commodities Research at Motilal Oswal Financial Services.
Focus today will be on the service PMI data expected from major economies. Gold in India last week was being sold at a premium for the first time in more than two months as demand gained traction after curbs to combat the second wave of the coronavirus were slightly relaxed, he said.
The broader range on COMEX could be between $1776- 1803 and on the domestic front, prices could hover in the range of Rs 47,200- 47,600.
“COMEX gold trades higher near $1793/oz extending the early gains. Gold has inched up as mixed US non-farm payrolls data has brought a halt to the US dollar’s rise. Renewed virus concerns have also increased gold’s safe-haven appeal. However, weighing on price is weaker investor interest and Fed’s monetary tightening expectations. Gold has edged up on mixed US jobs report however upside remains restricted by persisting worries about Fed's monetary tightening,” said Ravindra Rao, CMT, EPAT, VP- Head Commodity Research at Kotak Securities.
The gold/silver ratio currently stands at 68.13 to 1, which means 68.13 ounces of silver is required to buy an ounce of gold.
Silver prices climbed by Rs 676 to Rs 69,651 per kg against its closing price on July 2.
In the futures market, the gold rate touched an intraday high of Rs 47,425 and an intraday low of Rs 47,250 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 rose Rs 7, or 0.01 percent, to Rs 47,292 per 10 gram in evening trade on a business turnover of 10,726 lots. The same for October added Rs 26, or 0.05 percent, to Rs 47,633 on a business turnover of 4,451 lots.
The value of August and October’s contracts traded so far is Rs 1,230.96 crore and Rs 156.20 crore, respectively.
Similarly, Gold Mini contract for August edged up by Rs 13, or 0.03 percent at Rs 47,303 on a business turnover of 15,290 lots.
Trading Strategy
Tapan Patel- Senior Analyst (Commodities), HDFC Securities
Gold prices continued upside for the fourth straight day as few central banks have started buying gold on higher inflation. The central banks of Serbia, Ghana and Thailand have increased their gold holdings recently. The decline in the dollar index boosted buying in gold for the day.
We expect gold prices to trade sideways to up for the day with COMEX gold support at $1770 and resistance at $1800 per ounce. MCX Gold August support lies at Rs 47,000 and resistance at Rs 47,600 per 10 gram.
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