Gold firms on sluggish dollar ahead of US jobs data

Gold prices drop by Rs 307 to Rs 47,276 per 10 gm ahead of FOMC minutes; silver falls by Rs 595

By Administrator_India

Capital Sands

Gold prices declined by Rs 307 to Rs 47,276 per 10 gram in the Mumbai retail market on the firm rupee and muted global cues. The yellow metal traded in a narrow range as investors await FOMC meeting minutes later in the day.

The price of 10 gram, 22-carat gold in Mumbai was Rs 43,305 plus 3 percent GST, while 24-carat 10 gram stood at Rs 47,276 plus GST. The 18-carat gold is quoted at Rs 35,457 plus GST in the retail market.

Minneapolis Fed President Kashkari said that it could be “reasonable” to start reducing the Fed’s bond-buying program later this year, though it would depend on making further progress in the labour market. 

Investors will focus on the minutes from Fed’s July meeting for any guidance on taper plans.

Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell by 3.49 tonnes to 1,017.14 tonnes. The ETF has a market value of $58.50 billion.

A gauge for US dollar, Dollar Index traded above 93 marks on safe-haven interest.

Spot gold was marginally higher by $3.99 to $1,790.21 an ounce at 1235 GMT in London trading.

MCX Bulldesk rose by 16 points or 0.11 percent, at 14,225 at 18:07. The index tracks the real-time performance of MCX Gold and MCX Silver futures.

“Gold traded steady hovering over the one week high, as the precious metal was caught between mixed US economic data, firmer dollar and safe-haven demand driven by the delta coronavirus variant fears. US retail sales dropped last month as a resurgence of the pandemic contributed to a pullback in spending. Sales were down 1.1% against the previous month. The decline was steeper than expected. Although, on other hand, US industrial production was reported better than expectations, up by around 0.7% from last month,” said Navneet Damani, VP – Commodities Research at Motilal Oswal Financial Services.

The broader range on COMEX could be between $1775- 1815 and on the domestic front, prices could hover in the range of Rs 47,000- 47,700.

The gold/silver ratio currently stands at 74.63 to 1, which means 74.63 ounces of silver is required to buy an ounce of gold.

Silver prices dropped by Rs 595 to Rs 63,341 per kg against its closing price on August 17.

In the futures market, the gold rate touched an intraday high of Rs 47,437 and an intraday low of Rs 47,136 on the Multi-Commodity Exchange (MCX). For the October series, the yellow metal touched a low of Rs 45,662 and a high of Rs 50,040. 

Gold futures for October delivery jumped Rs 20, or 0.04 percent, to Rs 47,300 per 10 gram in evening trade on a business turnover of 12,233 lots. The same for December soared Rs 75, or 0.16 percent, to Rs 47,509 on a business turnover of 1,788 lots.

The value of October and December’s contracts traded so far is Rs 1,748.93 crore and Rs 36.09 crore, respectively.

Similarly, Gold Mini contract for September edged up Rs 21, or 0.04 percent at Rs 47,227 on a business turnover of 13,429 lots.

Trading Strategy

Tapan Patel- Senior Analyst (Commodities), HDFC Securities

Gold prices fluctuated in the upper trading range on mixed global cues over rising worries over fast-spreading delta coronavirus variant and weak data. The traders and investors are waiting for US FED minutes to gauge any signs of tapering of assets purchase. 

We expect gold prices to trade sideways to up with COMEX spot gold resistance at $1,810 and support at $1,770 per ounce. MCX Gold October support lies at Rs 46,900 and resistance at Rs 47,500 per 10 gram.

Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited

Technically, International Gold is trading with a positive bias near $1,790. The market is sustaining above 50-SMA which is acting as dynamic support for the prices. We may witness bullish momentum to continue in the domestic market in the evening session where prices may sustain above Rs 47,500.

Sriram Iyer, Senior Research Analyst at Reliance Securities

Technically, LBMA Gold is trading near 21-Daily Moving Average which is placed at $1789 levels above which will continue its uptrend up to $1802-$1821 levels. Support is at $1783-$$1771 levels.

On the domestic front, MCX Gold October could see a bullish momentum up to 47450-47600 levels and support is at Rs 47,150-47,000 levels.

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