Gold prices back above Rs 48,000 on safe-haven billing, rupee slips; silver up Rs 359

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Gold prices soared Rs 337 to Rs 48,142 for 10 gram in the Mumbai bullion market, tracking a positive overseas trend and a sharp fall in the rupee.

The precious metal reclaimed $1,800 an oz on safe-haven appeal as the 10-year US treasury yields fell 1.65 percent and rising cases of coronavirus in China and curb in Europe and Russia.

The price of 10 gram 22-carat gold in Mumbai was Rs 44,098 plus 3 percent GST, while 24-carat 10 gram stood at Rs 48,142 plus GST. The 18-carat gold quoted at Rs 36,107 plus GST in the retail market.

Gold prices traded higher during the previous week, supported by weaker dollar and inflation worries despite a rise in US bond yields, said Tapan Patel-Senior Analyst (Commodities), HDFC Securities.

“Gold prices kept a firm trading range despite positive equity indices and ease in concerns over China’s Evergrande debt crisis. Gold prices added risk premium after Russia and some parts of Europe imposed COVID restriction with a rise in virus cases,” said Patel.

Gold prices got a boost on October 22 after US Federal Reserve chairman Jerome Powell confirmed the central bank’s plans to start tapering its monthly stimulus of $120 billion between November and December.

The traders and investors remained wary of Fed stance as Powell didn’t indicate any timeline for a rate hike, he added.

The growing bets over inflation not being transitory have been supportive of gold, as it is widely considered as a hedge against inflation and currency debasement.

Investors are now eying the Bank of Japan and the European Central Bank (ECB) meetings this week.

German business confidence worsened for the fourth month in October as supply bottlenecks in manufacturing, a spike in energy prices and rising COVID-19 infections are slowing the pace of recovery in Europe’s largest economy.

The CFTC data showed that money managers decreased their net long positions by 536 lots in last week.

Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund decreased by 2.03 tonnes to 978.07 tonnes, the lowest level in 2021. The ETF has a market value of $56.84 billion.

The dollar index traded higher at 93.84, up 0.24 percent against a basket of six rival currencies. The rise in the greenback makes bullion expensive for other currency holders.

Spot gold increased by $8.76 to $1,801.21 an ounce at 1223 GMT in London trading.

MCX Bulldek rose by 83 points or 0.57 percent to 14,520 at 5.54 pm. The index tracks the real-time performance of MCX Gold and MCX Silver futures.

“MCX Gold December futures may appreciate to Rs 47,900 per 10 gram as the Fed has successfully laid the ground for separating the tapering portion of monetary policy tightening from interest rate hikes and committed to that again in comments made by Jerome Powell on Friday,” said Jigar Trivedi, Research Analyst- Commodities Fundamental, Anand Rathi Shares & Stock Brokers.

“A weaker dollar will also pull the bullion higher. Lastly, since India may witness rising footfall at jewellery shops ahead of Diwali, retail buying could also be a positive trigger for the yellow metal. Meanwhile, amid strong momentum in base metals, Silver December may also rise to Rs. 66,000 per kg.”

The gold-silver ratio stands at 73.32 to 1, which means 73.32 ounces of silver is required to buy an ounce of gold.

Silver prices surged by Rs 359 to Rs 65,653 per kg against its closing price on October 22.

In the futures market, the gold price touched an intraday high of Rs 48,160 and an intraday low of Rs 47,855 on the Multi-Commodity Exchange (MCX). For the December series, the yellow metal touched a low of Rs 45,705 and a high of Rs 48,899.

Gold futures for December delivery edged higher by Rs 332, or 0.69 percent, at Rs 48,129 in evening trade on a business turnover of 11,401 lots. The same for February jumped by Rs 379, or 0.79 percent, to Rs 48,285 on a business turnover of 3,354 lots.

The value of December and February contracts traded so far is Rs 1,317.59 crore and Rs 74.55 crore, respectively.

Similarly, the Gold Mini contract for November gained by Rs 307, or 0.64 percent, at Rs 47,975 on a business turnover of 9,064 lots.

Trading Strategy

Tapan Patel, Senior Analyst (Commodities), HDFC Securities

Gold prices were boosted by Fed tapering expectations and a weaker dollar. Gold prices were supported by a fall in US bond yields as 10-year US treasury yields dropped to 1.64 percent.

Global inflation worries and renewed COVID-related restrictions in Russia and some parts of Europe may add risk premium in the prices.

We expect gold prices to trade up with COMEX spot gold resistance at $1,810 and support at $1,785 per ounce. MCX Gold December support lies at Rs 47,800 and resistance at Rs 48,300 per 10 gram.

Sriram Iyer, Senior Research Analyst, Reliance Securities

Technically, LBMA gold resistances are at $1,805 and $1,820. Supports are at $1,780 and $1,770. Technically, MCX December gold resistances are at Rs 48,100 and Rs 48,500. Supports remain at Rs 47,400 and Rs 47,150.

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Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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