Gold prices plunged by Rs 552 to Rs 47,670 per 10 gram in the Mumbai retail market on firm rupee and negative global trends owing to improved risk sentiment. The yellow metal was also weighed down by worries about rising inflation and the growing number of coronavirus cases.
The price of 10 gram, 22-carat gold in Mumbai was Rs 43,666 plus 3 percent GST, while 24-carat 10 gram stood at Rs 47,670 plus GST. The 18-carat gold is quoted at Rs 35,753 plus GST in the retail market.
The revival in the global equity markets and bond returns after the sell-off earlier in the week shifted the investors away from gold.
The European Central Bank left its vast pandemic stimulus in place and kept rates at historic lows, as concerns grow over a new rise in coronavirus cases.
US President Joe Biden also underplayed the rising inflationary concerns by saying that the current uptick in consumer prices will be short-lived as the US economy emerges from the global COVID-19 crisis, adding that his economic plan will reduce inflation over the long term.
The US dollar trades lower at 92.70, down 0.06 percent against a basket of six rival currencies.
Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, were unchanged for the third day at 1,028.55 tonnes. The ETF has a market value of $59.58 billion.
Spot gold declined by $7.87 to $1,795.74 an ounce at 1157 GMT in London trading.
MCX Bulldesk decreased by 57 points or 0.39 percent, at 14,482 at 17:34. The index tracks the real-time performance of MCX Gold and MCX Silver futures.
“Gold prices edged lower amidst a firm dollar, held close to a 3-1/2 month peak and bounce back in the US yields from five-month lows. Worries regarding the rise of Delta variant of coronavirus is supporting metal prices at a lower level,” said Navneet Damani, VP – Commodities Research at Motilal Oswal Financial Services.
The broader range on COMEX could be $1,780- $1,818 and on the domestic front, prices could hover in the range of Rs 47,170- 47,850.
“COMEX gold trades lower near $1797/oz pressurised by improved risk sentiment and recovery in bond yields from recent lows. However, supporting the price is persisting virus risks and inflation concerns and expectations that ECB may maintain a dovish stance. ETF investors remain on the sidelines awaiting fresh triggers. Gold continues to hold near $1800/oz and buying interest may emerge at lower levels amid persisting challenges to the global economy,” said Ravindra Rao, CMT, EPAT-Quantinsti, Head - Commodity Research at Kotak Securities Ltd.
The gold/silver ratio currently stands at 71.39 to 1, which means 71.39 ounces of silver is required to buy an ounce of gold.
Silver prices fell by Rs 214 to Rs 66,766 per kg against its closing price on July 20.
In the futures market, the gold rate touched an intraday high of Rs 47,531 and an intraday low of Rs 47,301 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 dropped Rs 198, or 0.42 percent, to Rs 47,375 per 10 gram in evening trade on a business turnover of 5,881 lots. The same for October slipped Rs 213, or 0.44 percent, to Rs 47,663 on a business turnover of 8,927 lots.
The value of August and October’s contracts traded so far is Rs 1,683.13 crore and Rs 236.65 crore, respectively.
Similarly, Gold Mini contract for August slumped Rs 186, or 0.39 percent at Rs 47,398 on a business turnover of 13,387 lots.
Trading Strategy
Tapan Patel- Senior Analyst (Commodities), HDFC Securities
Gold prices traded down to the lowest levels in two weeks with a rise in US bond yields and the dollar index. The 10-year US Treasury yields rose to 1.28 percent while dollar index extended gains by 0.12 percent to 92.87 marks. The inflows in the dollar index over rising virus worries have triggered selling at gold prices.
We expect gold prices to trade sideways to down with COMEX spot gold resistance at $1810 and support at $1790 per ounce. MCX Gold August support lies at Rs. 47100 and resistance at Rs.47600 per 10 gram.
Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited
Technically, International Gold is trading with a bearish momentum below $1,800 levels and are sustaining below 50-SMA. Major support is at $1,798-$1,790 levels. On the domestic front, the price created a new weekly low of Rs 47,301 earlier today and have declined more than 200 points since the previous close. We may expect the market to continue to trade with bearish momentum and trade near Rs 47,000 level during the evening hours.
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