Gold prices slip to Rs 47,384/10 gm as US bond yields rise; silver down Rs 180 a kg

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Gold prices fell on October 18, down by Rs 741 to Rs 47,384 per 10 gram in the Mumbai bullion market tracking a sharp fall on Friday in the global market as the Indian market was shut on account of Dussehra and firm equity markets. The precious metal was also pressured by surging 10-year Treasury yield and strength in the dollar.

The price of 10 gram, 22-carat gold in Mumbai was Rs 43,404 plus 3 percent GST, while 24-carat 10 gram stood at Rs 47,384 plus GST. The 18-carat gold quoted at Rs 35,538 plus GST in the retail market.

“Gold prices traded higher last week on safe-haven buying on global inflation worries and a weaker dollar. Gold prices gained momentum with rising energy costs for industries and a possible rise in inflation ahead of power shortage in winter. Gold prices pared some of the weekly gains on Friday with a rise in US bond yields as better than expected retail sales data spurred expectations of sooner Fed tapering,” Tapan Patel, Senior Analyst (Commodities), HDFC Securities.

On the data front, China’s economy grew slower than expected in Q3, which is supportive of the metal prices.  Investors will now keep an eye on the US Industrial production data which if recorded lower than the expectations it could support the bullion.

The CFTC data showed that money managers increased their net long positions by 1,976 lots in last week.

Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell by 2.62 tonnes to 980.10 tonnes, the lowest level in 2021. The ETF has a market value of $55.84 billion.

The US dollar index trades slightly up at 94.01, up 0.07 percent against a basket of six rival currencies. 

Spot gold eased by $0.32 to $1,767.30 an ounce at 1210 GMT in London trading.

MCX Bulldek increased by 21 points or 0.15 percent to 14,163 at 17:49. The index tracks the real-time performance of MCX Gold and MCX Silver futures.

“Gold traded steady after sliding from the top of $1800 it touched last week on the back of positive US economic data and uptick in dollar and yields. Last week, bullion did witness a push on the upside from higher US CPI data proving the ‘gold being an inflation hedge’ dialogue. Although, lower than expected jobless claims and positive Retail sales data which were marked at 0.7 against the expectations of -0.2%, weighed on the prices,” said Navneet Damani, VP – Commodities Research at Motilal Oswal Financial Services.

Most Fed policymakers agree the central bank could start reducing its monthly bond purchases as soon as next month, they are sharply divided over inflation and what they should do about it, he added.

The broader range on COMEX could be between $1735- 1780 and on the domestic front, prices could hover in the range of Rs 47,020- 47,535.

The gold-silver ratio currently stands at 75.08 to 1, which means 75.08 ounces of silver is required to buy an ounce of gold.

Silver prices dropped by Rs 180 to Rs 63,110 per kg against its closing price on October 14.

In the futures market, the gold rate touched an intraday high of Rs 47,366 and an intraday low of Rs 47,169 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 jumped by Rs 73, or 0.15 percent, at Rs 47,286 per 10 gram in evening trade on a business turnover of 12,101 lots. The same for February gained by Rs 89, or 0.19 percent, to Rs 47,448 on a business turnover of 2,170 lots.

The value of December and February contracts traded so far is Rs 1,451.80 crore and Rs 62.14 crore, respectively.

Similarly, the Gold Mini contract for November edged higher Rs 84, or 0.18 percent at Rs 47,190 on a business turnover of 13,928 lots.

Trading Strategy

Tapan Patel- Senior Analyst (Commodities), HDFC securities

Gold prices upside was capped on Monday pressured by a stronger dollar and mixed global cues. Gold prices have kept a steady trading range following weak China GDP data and global inflation worries. The dollar index was trading around 0.11% up by noon session while 10 years US bond yields rose to 1.59% on expected Fed tapering. 

We expect gold prices to trade sideways to up with COMEX spot gold resistance at $1800 and support at $1750 per ounce. MCX Gold December support lies at Rs 46,900 and resistance at Rs 47,500 per 10 gram.

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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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