Domestic gold prices seesawed between gains and losses on Friday amid rising US Treasury yields and a slump on Dalal Street.
Where on one hand higher US yields rendered the yellow metal less attractive, deep losses in equities back home led investors to run safer instruments, say analysts.
MCX gold futures for delivery on June 4 were last seen trading Rs 45 or 0.10 per cent higher at Rs 46,771 per 10 grams after gyrating within a Rs 199 range, between Rs 46,620 and Rs 46,819, as against their previous close of Rs 46,726. The August 5 contract on the bourse was up Rs 79 or 0.17 per cent at Rs 47,114, stuck in a range between Rs 46,962 and Rs 47,114.
MCX silver futures (May 5) quoted at Rs 67,567, up 0.14 per cent on the day.
Globally, spot gold quoted at $1,768.85 per ounce, down 0.18 per cent.
The yield on the 10-year US Treasury bill was at 1.65 per cent at the last count, having earlier hit its strongest level in over two weeks. Higher bond yields inflate the opportunity cost of bullion.
Data released on Thursday showed US economic growth accelerated in the first quarter of 2021, as stimulus measures propped up consumer demand.
Back home, spot gold and silver of 99.9 per cent purity stood at Rs 46,791 per 10 grams and Rs 67,800 per kilogram, respectively, according to Mumbai-based India Bullion and Jewellers Association (IBJA), an industry body. Both prices exclude GST.
Domestic equity benchmarks Sensex and Nifty closed 1.98 per cent and 1.77 per cent lower, respectively, putting an end to their longest winning streak since early February.
Typically, gains in share markets boost the risk appetite of investors, and vice versa.
The rupee settled marginally lower at 74.09 against the dollar, halting a four-day winning run. The dollar index, which gauges the greenback against six peers, quoted 0.28 per cent stronger at 90.84.
What analysts say
“The US administration gave money to mostly lower-income households, increasing the consumer’s purchasing power… The US President proposed a new $1.8 trillion plan for families and education in a speech to a joint session of Congress, which will support the overall growth of the economy but also increase the already rising debt,” said Navneet Damani, VP-Commodities Research, Motilal Oswal Financial Services.
Damani expects a broader range of $1,750-1,780 per ounce on COMEX gold (Rs 46,550-47,020 per 10 grams in domestic rates) in the near term.
Analysts say strength in the dollar and rising US yields could restrict gains for precious metals in the near term, however, uncertainty around Covid-19 may continue to support rates over the medium term.
Technical view
“At MCX, gold has support at Rs 46,550-46,300 and resistance at Rs 46,920-47,100, and silver support at Rs 67,100-66,600 and resistance at Rs 67,800-68,300, respectively,” said Manoj Kumar Jain, Director-Head of Commodity Research, Prithvi Finmart.
Jain suggests buying silver around Rs 67,000 for a target of Rs 68,200 with a stop loss at Rs 66,500, and silver around Rs 67,500 for a target of Rs 68,500 with a stop loss at Rs 67,100.
Market participants will focus on US inflation data due later in the day for cues.