NEW DELHI: Gold prices edged up higher in the domestic markets on Monday, bucking the global trend. However, it traded in a range ahead of the festive season.
Gold futures on MCX were trading 0.15 per cent or Rs 75 at Rs 47,705 per 10 grams. Whereas, silver futures were down 0.16 per cent or Rs 103 at Rs 64,431 per kg.
Ravi Singh, Vice President & Head of Research, Share India said gold prices traded range-bound taking cues from global market and stronger treasury yields. “The expectation of early stimulus tapering by the Fed is keeping us dragging gold prices down whereas fear of economic bottlenecks towards recovery is increasing the safe-haven appeal,” he added.
The prices traded steady as the yellow metal pared some of the previous losses despite a firm dollar and rise in US bond yields. Meanwhile, the US dollar rose after data showing another advance in inflation fuelled bets over the Federal Reserve tightening its policy sooner. The Federal Reserve’s two-day policy meeting concludes on Wednesday.
Gold is traditionally seen as an inflation hedge. However, reduced stimulus and interest rate hikes to combat such inflationary pressure tend to push government bond yields up, raising non-interest bearing gold’s opportunity cost.
Ravindra Rao, CMT, EPAT, VP- Head Commodity Research at Kotak Securities said mixed US and Chinese economic data, lower bond yields and continuing inflation and growth worries supported the precious metal. “However, weighing on price is strength in equities, lack of investor buying and rebound in US dollar amid positioning ahead of Fed decision,” he added.
Physical gold was sold at a premium in India last week as consumers flocked to retailers ahead of big festivals, while premiums in top consumer China dropped.
In the spot market, the highest purity gold was sold at Rs 47,975 per 10 grams while silver was priced at Rs 64,508 per kg on Friday, according to the Indian Bullion and Jewellers Association.
The spot price moved more than Rs 2,100 higher in the month of October, whereas silver jumped about Rs 6,400 per kg during the period under review.
Trading strategy
“We expect gold prices to trade sideways to down for the day with COMEX Spot gold support at $1775 and resistance at $1800 per ounce. MCX Gold December support lies at Rs. 47300 and resistance at Rs. 48000 per 10 gram,” Tapan Patel, Senior Analyst (Commodities), HDFC Securities said.
Global markets
Spot gold fell 0.1 per cent to $1,781.78 per ounce by 0044 GMT, after slipping to an over one-week trough on Friday. U.S. gold futures dropped 0.1 per cent to $1,782.80.
Spot silver fell 0.2 per cent to $23.81 per ounce. Platinum rose 0.5 per cent to $1,023.03, while palladium eased 0.3 per centto $1,996.90.