Gold futures ease below Rs 46,900, silver firm: How to trade at current juncture

Gold futures ease below Rs 46,900, silver firm: How to trade at current juncture

Domestic gold prices reversed initial gains to ease below the Rs 46,900 per 10 grams mark as the dollar gained after the US central bank maintained a status quo on policy rates. The Federal Reserve said it was too early to consider tapering asset buys to support the pandemic-hit economy.

MCX gold futures for delivery on June 4 eased by Rs 228, or 0.48 per cent, to Rs 46,865 per 10 grams at the last count, having slumped to as low as Rs 46,860 earlier on Thursday, reversing direction from an intraday high of Rs 47,299.

The contract had settled at Rs 47,093 per 10 grams on Wednesday.

MCX silver, however, bucked the trend, trading higher by Rs 419 or 0.62 per cent at Rs 68,205.

Federal Reserve Chairman Jerome Powell said on Wednesday that it was “not time yet” to begin talking about early tapering of asset purchases as the economy needed to create more employment.

Globally, spot gold was last seen down $4.83, or 0.27 per cent, at $1,776.76 per ounce.

Back home, spot gold and silver of 99.9 per cent purity stood at Rs 46,930 per 10 grams and Rs 68,460 per kilogram, respectively, according to Mumbai-based India Bullion and Jewellers Association (IBJA), an industry body. Both prices exclude GST.

On Dalal Street, both benchmark indices ended a volatile session only marginally higher but managed to log their longest winning streak since early February.

An ongoing rally in metal stocks aided the upbeat sentiment on Dalal Street amid optimism on the corporate earnings front but volatility, ahead of the expiry of monthly derivatives contracts, played spoilsport.

Typically, gains in equities boost the risk appetite of investors, moving them away from safety bets such as precious metals.

Meanwhile, appreciating for a fourth straight day, the rupee strengthened by 29 paise to settle at 74.07 against the dollar, boosted by the mood on Dalal Street amid steadiness in the greenback overseas.

The dollar index – which gauges the US currency against six peers – was down 0.04 per cent at 90.56.

What analysts say

“US President Joe Biden plans to unveil a sweeping $1.8 trillion package for families and education in his first speech to Congress, supporting the overall sentiment. Market participants will keep an eye on the first quarter GDP data from the US and weekly jobless claims scheduled later in the day, which could trigger further volatility in the market,” said Navneet Damani, VP-Commodities Research, Motilal Oswal Financial Services.

Damani expects a broader range of $1,775-1,798 per ounce on COMEX gold (Rs 47,000-47,550 per 10 grams in domestic rates) in the near term.

Many analysts believe the yellow metal is in a broader uptrend amid uncertainty surrounding the pandemic and may test levels around Rs 50,000 per 10 grams in the near term.

“A steady equity market and signs of economic recovery in the US and China may dent major gains in the commodity.”

— Hareesh V, Head of Commodity Research, Geojit Financial Services

Technical view

“At MCX, gold has support at Rs 46,920-46,800 and resistance at Rs 47,330-47,480, and silver support at Rs 67,500-67,100 and resistance at Rs 68,200-68,800,” said Manoj Kumar Jain, Director-Head of Commodity Research, Prithvi Finmart.

Jain suggests buying gold around Rs 47,000 for a target of Rs 47,480 with a stop loss at Rs 46,780, and silver around Rs 67,500 for a target of Rs 68,500 with a stop loss at Rs 67,100.

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