Domestic gold futures swung between gains and losses with a positive bias on Friday as spot gold hit a more than two-month high above the $1,800 per ounce mark amid weakness in the dollar. With a weekly gain of almost 3 per cent so far, bullion was on track to clock its best week since early November.
MCX gold futures for a June 4 delivery traded higher by Rs 310 or 0.47 per cent at Rs 47,820 per 10 grams at the last count on Friday evening, having fluctuated within a Rs 310 range around the flatline, between Rs 47,520 and Rs 47,830.
MCX silver futures (July 5) followed suit, trading higher by Rs 252 or 0.35 per cent at Rs 71,933 per kilogram, after gyrating in a more than Rs 1,000 range, between Rs 71,145 and Rs 72,160.
While weakness in the greenback made gold more attractive for those holding other currencies, broader gains in metals and other commodities underpinned bullion prices, helping the yellow metal take out crucial resistance at $1,800 per ounce, say analysts.
Comex spot gold was last seen trading a stone’s throw from the intraday high of $1,839.47 per ounce, the highest intraday level recorded since February 11. Spot silver climbed to as high as $27.67, a level last seen on February 25.
The dollar index – which gauges strength in the greenback against six peers – hit a one-week low and the 10-year US yields came close to a two-week trough.
Market participants keenly awaited US jobs data due later in the day as any positive surprises could put pressure on the prices of bullion, traditionally considered a safe haven and a hedge against inflation as well as financial uncertainty.
“Gold surpassed the psychological resistance of $1,800 aided by a pullback in the dollar and Treasury yields as investors waited for US non-farm payrolls data cautiously for further cues on the health of the world’s biggest economy,” said Navneet Damani, VP-Commodities Research, Motilal Oswal Financial Services.
Some analysts say gold appears to be in a broader uptrend from a long-term perspective.
The road ahead
Damani expects spot gold (Comex) to move within a range of $1,805-1,850 and the MCX contract to hover between Rs 47,470 and Rs 48,200 per 10 grams in the near term.
Back home, spot gold (22 carat) added Rs 474 for the day to close at Rs 47,185 per 10 grams in the national capital, and silver climbed by Rs 1,050 to settle at Rs 70,791 per kilogram.
The rupee appreciated by 27 paise to finish at 73.51 against the dollar for the day, rising for a second straight session. Dalal Street also cheered a rally in commodities with metal stocks helping benchmarks push higher for the third day in a row.
The S&P BSE Sensex index rose 0.52 per cent to 49,206.47 and the broader NSE Nifty 50 spiked 0.67 per cent to settle at 14,823.15, though taking away some sheen from the precious metals as gains in equities typically aid investors’ risk appetite, moving them away from safety bets.
Technical view
The nearby month contract at MCX has support at Rs 47,330-47,100 and resistance at Rs 47,800-48,050, said Manoj Kumar Jain, Director-Head of Commodity Research, Prithvi Finmart.
For silver, he pegged support at Rs 71,100-70,700 and resistance at Rs 72,400-72,900.
“We suggest buying in gold around Rs 47,300 for a target of Rs 47,850 with a stop loss at Rs 46,980 and buying silver around Rs 71,100 for a target of Rs 72,600 with a stop loss at Rs 70,500,” Jain added.
MCX gold is currently trading above its 50-day moving average and below its 200-day moving average, said Ajay Kedia, Founder and Director, Kedia Advisory. “Momentum indicator RSI suggests prices are currently in the positive zone. Gold is expected to trade with volatility in the coming sessions.”
Kedia sees gold holding the Rs 46,800 level for the time being, and testing the Rs 49,400-mark in the next 1-2 months and Rs 51,100 in six months.