Gold futures hit 1-week low as rupee rises, D-St bulls roar: What analysts say

Gold futures hit 1-week low as rupee rises, D-St bulls roar: What analysts say

d Domestic gold futures eased below the Rs 47,000 per 10 grams mark on Wednesday amid firming up US Treasury yields ahead of the outcome of Federal Reserve’s scheduled policy review later in the day.

MCX gold futures for delivery on June 4 eased by Rs 378 or 0.80 per cent to quote at Rs 46,925 per 10 grams at the last count, having slid to Rs 46,910 per 10 grams earlier on Wednesday – the lowest intraday level recorded since April 20.

The August 5 contract was down Rs 345 or 0.73 per cent at Rs 47,235.

MCX silver futures (May 5) traded at Rs 67,895, down Rs 1,063 or 1.54 per cent from their previous close.

Globally, spot gold slumped to a one-week low of $1,763.46 per ounce, and was last seen at $1,765.33 per ounce. Back home, spot gold and silver of 99.9 per cent purity stood at Rs 46,950 per 10 grams and Rs 67,846 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 registered sharp gains for a third straight day amid buying across sectors, especially in bank and auto spaces.

Upbeat sentiment in domestic equities backed by strong corporate earnings by blue chips kept riskier assets in high demand, rendering gold less attractive, say analysts.

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

Meanwhile, the rupee strengthened by 30 paise to 74.36 against the dollar, extending gains to the third day in a row.

The dollar index – which measures the greenback against six peers – edged higher to 91, whereas the benchmark 10-year US yield spiked to return above the 1.6 per cent mark, at 1.65 per cent.

While the Federal Reserve’s rate-setting committee is widely expected to maintain a status quo on benchmark lending rates, market participants will monitor Chairman Jerome Powell’s commentary closely for more clarity on future policy and how the US central bank plans to tackle the pandemic that has battered the global economy.

“Comments on yields, inflation, the US economy and liquidity will be very important to watch as they could trigger further volatility in the market… After the FOMC policy meet, market participants will keep their eyes on the US GDP numbers,” said Navneet Damani, VP-Commodities Research, Motilal Oswal Financial Services.

Damani expects a broader range of $1,757-1,782 per ounce on COMEX gold (Rs 46,800- 47,500 per 10 grams in domestic rates) in the near term.

Many analysts believe the yellow metal is in a broader uptrend and may test higher levels over the medium term amid uncertainty surrounding the pandemic.

The dollar index has shown some respite ahead of the Fed meeting and triggered some profit taking in gold, said Manoj Kumar Jain, Director-Head of Commodity Research, Prithvi Finmart.

Technical view

Jain suggests selling gold around Rs 47440 for a target of Rs 47,000 with a stop loss at Rs 47,700.


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