NEW DELHI: Gold prices on Tuesday traded near a five-month high scaled last week, supported by a softer dollar and growing inflationary pressures. The precious metals extended gains in domestic markets on the back of mixed cues.
Investors awaited key US data that will provide a clearer picture on the global economy’s recovery path. Market participants’ focus this week will be on US payrolls data on Friday. Investors focused on weaker than expected China manufacturing data.
The dollar index was down 0.3 per cent against its rivals, making gold less expensive for other currency holders. The US unit registered its second consecutive monthly loss. The US 10-year treasury yield fell to 1.593 per cent on Friday, while the markets were shut on Monday.
Gold, often used as a hedge against inflation, has benefited from the recent data showing a rise in prices across the globe. Industry watchers expect it to strengthen in the near future.
Physical gold demand in India, the second biggest bullion consumer, has fallen steeply due to curbs and restrictions imposed by the local governments. Analysts are expecting a rebound, once the lockdown is lifted.
The Sovereign Gold Bond Scheme 2021-22, Series-III or the third tranche is open for subscription from May 31 to June 4, 2021. The issue price has been fixed at Rs 4,889 per gram.
Gold futures on Multi Commodity Exchange (MCX) were up by 0.27 per cent or Rs 127 at Rs 49,482 per 10 grams. Silver futures rose by 0.95 per cent or Rs 683 to Rs 72,581 per kg.
“COMEX gold trades marginally higher by 0.35 per cent near $1912/oz after a 0.4 per cent gain on Friday. Gold continues to hold above $1900/oz as Fed and other central banks emphasize on continuing with loose monetary policy,” said Ravindra Rao, CMT, EPATVP-Head Commodity Research at Kotak Securities.
In the spot market, highest purity gold was sold at Rs 49,032 while silver was priced at Rs 71,350 on Monday, according to the Indian Bullion and Jewellers Association.
“However, ETF outflows and weaker demand in India amid continuing virus related restrictions might cap the gains. Gold has continued to hold above $1900/oz, however, any sustained rise may be challenged by a pause in the US dollar index fall.”
Trading strategy
“We expect gold prices to trade sideways to up with COMEX gold support at $1,897 and resistance at $1,920 per ounce. MCX Gold Aug support lies at Rs 49,000 and resistance at Rs 49700 per 10 gram,” said Tapan Patel, Senior Analyst (Commodities) at HDFC Securities.
Global markets
Spot gold was steady at $1,907.54 per ounce by 0048 GMT. Last week, gold prices hit their highest since Jan 8 at $1,912.50. US gold futures edged 0.3 per cent higher to $1,910.60 per ounce.
Palladium rose by 0.5 per cent to $2,844.19 per ounce, silver eased by 0.1 per cent to $28.03, and platinum gained by 0.2 per cent to $1,188.38.