Gold prices declined for the fourth consecutive day on February 4. The precious metal fell by Rs 524 to Rs 47,452 per 10 gram in the Mumbai retail market on increased appetite for riskier assets and a strong equity market. The yellow metal was further pressured by a firm dollar and rising bond yields.
The risk sentiment has improved on hopes of additional US stimulus measures and progress on vaccine front.
The rate of 10 gram 22-carat gold in Mumbai was Rs 43,946 plus 3 percent GST, while 24-carat 10 gram was Rs 47,976 plus GST. The 18-carat gold quoted at Rs 35,982 plus GST in the retail market.
“The optimism that vaccines would heal the global economy in just a few months has been dampened by the outbreak of new variants and problems with the vaccine rollout in the developed world. Given the current risks, uncertainty and continued commitment to accommodative policies, gold prices definitely seem stretched to the downside, making now an opportune time to build your gold allocation”, said Chirag Mehta, Sr. Fund Manager-Alternative Investments.
“Amid the market volatility, the dollar gained strength due to its safe-haven appeal, despite all the talk about the impending US stimulus. Gold lost 3% in the month in dollar terms, even though it is viewed as a counterbalance against currency debasement and inflation which are expected with further economic stimulus”, Mehta noted.
The US House of Representatives pushed ahead with a manoeuvre to pass a $1.9 trillion coronavirus aid plan without Republican support, although President Joe Biden said he would consider tighter limits on who would qualify for $1,400 checks.
The US private payrolls rebounded more than expected, suggesting the labour market recovery was back on track after the economy shed jobs in December.
The US dollar trades higher at 91.42, or 0.34 percent against a basket of six currencies, the highest level since November 30.
Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, remained unchanged for the second day at 1,157.50 tonnes.
Spot gold declined by $19.61 to $1,814.58 an ounce at 1228 GMT in London trading.
MCX Bulldesk was down 147 points, or 0.97 percent, at 14,964 at 17:58. The index tracks the real-time performance of MCX Gold and MCX Silver futures.
Navneet Damani, Vice President, Motilal Oswal said, “Gold and silver prices edged lower, weighed down by a stronger dollar, while investors awaited the passage of a massive stimulus package in the US. The dollar hit its highest in over two months whereas benchmark 10-year Treasury yield rose to its highest in over three weeks, putting pressure on bullion.”
The broader range on COMEX could be between $1800- 1840 and on the domestic front, prices could hover in the range of Rs 47,200- 47,800.
“COMEX gold trades lower near $1815/oz amid a rise in US 10-year bond yield to 3-week high. Also weighing on price is weaker investor interest as is evident from ETF outflows. However, supporting price is global growth worries amid persisting virus risks and loose monetary policy stance of major central banks and hopes of additional US stimulus. Gold may witness choppy trade as gains in US dollar may be countered by US stimulus expectations”, said Ravindra Rao, VP- Head Commodity Research at Kotak Securities.
The gold/silver ratio currently stands at 70.80 to 1, which means the number of silver ounces required to buy one ounce of gold.
Silver prices slumped Rs 481 to Rs 67,015 per kg from its closing on February 3.
In the futures market, the gold rate touched an intraday high of Rs 47,673 and an intraday low of Rs 47,250 on the Multi-Commodity Exchange (MCX). For the April series, the yellow metal touched a low of Rs 47,201 and a high of Rs 51,931.
Gold futures for April delivery slide Rs 446, or 0.93 percent, at Rs 47,370 per 10 gram in evening trade on a business turnover of 13,945 lots. The same for June dropped Rs 412, or 0.86 percent, at Rs 47,495 on a business turnover of 682 lots.
The value of the April and June’s contracts traded so far is Rs 3,519.52 crore and Rs 71.28 crore, respectively.
Similarly, Gold Mini contract for March edged lower Rs 422, or 0.88 percent at Rs 47,320 on a business turnover of 20,616 lots.
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