Gold prices trade marginally higher; still down nearly Rs 10,000 per 10 gm from record high

Gold and silver prices in India gained marginally on Tuesday, due to a weaker rupee against the US dollar. On MCX, gold June futures were trading Rs 14 or 0.03 per cent up at Rs 46,433 per 10 grams as against the previous close of Rs 46,419. Silver May futures were ruling at Rs 66,160 per kg, up Rs 32 or 0.05 per cent, as compared to a previous close of Rs 66,128 on the Multi Commodity Exchange. MCX gold hit an all-time of Rs 56,191 per 10 grams last year in August. Since then, the yellow metal has been witnessing volatility.

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Some profit-booking has been observed in the gold prices on the back rising US Treasury yields, said Rahul Gupta, Head of Research, Emkay Global Financial Services. Gupta told Financial Express Online that the US inflation risks have been keeping the gold vulnerable. In spite of the Fed’s assurances of unwavering support, a pickup in inflationary pressure will be a test for the gold prices. However, Western Europe is making progress in fighting covid and the reopening of trades will be dollar negative and support gold prices. “In the short term, major resistance lies around 47500 and then at 48850. While, support is located at 45000 below which next support is around 43350,” added Gupta.

From a record high level, gold prices have plunged Rs 9,758 per 10 gram or 17.36 per cent. While MCX silver had hit a record high of Rs 77,949 per kg on August 7, 2020. Gold slipped off on Tuesday in COMEX, while in MCX, the weak Indian rupee against US dollar gave support to precious metal. Gold slid off this week is on account of firmer US Treasury yields after a successful three-year note auction. “Financial markets are shifting their focus to higher inflation risk but gold is yet to reflect that change as it has not been fully priced in,” Bhavik Patel, Senior Technical Research Analyst, Tradebulls Securities, told Financial Express Online. He also added that gold is seeing additional support coming from renewed physical demand from Central banks and retail participants. Retail demand in January picked up in India and gathered further momentum in Feb mainly on account of reduction in gold import duty and falling gold prices.

Gold continues to move in correlation with US dollar and yields. “On technical chart, gold once again failed to cross its immediate resistance of $1758 as since 21st Feb, it has twice attempted to breach that barrier failing which it falls down below $1700,” Patel said. “Although it is too soon to predict that we might again see levels below $1700 but the bullish momentum that gold picked up in last week seems to be stalling thanks to higher US Treasury yields,” he said. In MCX, though gold still looks strong on chart thanks to weak Indian Rupee which saw fall from Rs 73.10 to Rs.75.30 in matter of 9 trading session after RBI policy. “So, gold has support of weak INR in MCX and we continue to reiterate our policy of buy on dips. We expect gold to test levels of 46900-47200 this week with support around 45900 levels,” he said.

(The views in this story are expressed by the respective experts of research and brokerage firm. Financial Express Online does not bear any responsibility for their advice. Please consult your investment advisor before investing.)