Domestic gold futures eased to move within a half percent range on Tuesday as the yellow metal receded from a seven-week peak registered in the previous session. Support coming from weakness in the US dollar, which makes gold more attractive for those dealing in other currencies, was outweighed by rising US yields.
Gold futures trading on MCX for June 4 delivery quoted at Rs 47,216 per 10 grams at the last count, down Rs 177 or 0.37 per cent from their previous close. The contract dipped to Rs 47,128 per 10 grams at the weakest level of the day so far, shedding Rs 265 from its previous close.
MCX silver reversed the day’s gains to trade Rs 131, or 0.19 per cent, lower at Rs 68,193 per kilogram, after rising to as high as Rs 68,780 as against its previous close of Rs 68,324 a kg.
The 10-year US Treasury yield rose above the 1.6 per cent mark on Tuesday, breaking a three-day decline, raising the opportunity cost of holding non-yielding bullion. The benchmark had logged a five-week low last week.
In the international market, spot gold was last seen trading 0.19 per cent lower at $1,768.04 per ounce. It had touched $1,789.77 per ounce on Monday, its highest level recorded since February 25.
Spot silver eked out a gain of 0.07 per cent to quote at $25.85 per ounce.
Back home, gold and silver of 99.9 per cent purity stood at Rs 47,174 per 10 grams and Rs 68,608 per kilogram in the spot market, respectively, according to Mumbai-based India Bullion and Jewellers Association (IBJA), an industry body. Both prices exclude GST.
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What analysts say
“The rebound in US yields overpowered the support from the sagging dollar. Market participants could receive certain updates regarding the $2 trillion infra plan after US President Joe Biden’s meet with certain lawmakers yesterday,” said Navneet Damani, VP-Commodities Research, Motilal Oswal Financial Services.
Damani expects a broader range of $1760-1,787 per ounce on COMEX gold (Rs 46,950- 47,520 per 10 grams in domestic rates) in the near term.
MCX Gold’s hold above Rs 47,150 indicates resumption of the recently suggested bullish trend, said Ajay Kedia, founder and director of Mumbai-based Kedia Advisory.
The next resistance appears to be at Rs 47,850, although a break below Rs 47,150 will pose additional negative pressure on the contract to test Rs 46,940 before any up move, he added.
Meanwhile, the rupee settled nearly unchanged at 74.88 against the greenback, mirroring the dollar index, which was down 0.01 per cent. The dollar index gauges the US currency against six peers.
Market participants will closely monitor PMI data from major economies slated for this week.