Gold prices were steady at Rs 44,519 per 10 gram in the Mumbai retail market

Gold prices were steady at Rs 44,519 per 10 gram in the Mumbai retail market 

as consumers held back purchases in anticipation of prices going down further and a slump in the rupee was capped by rising bond yields and the dollar index.

The precious metal turned volatile as investors continued to remain wary of growing inflation which in turn lifted bond yields.

The rate of 10 gram 22-carat gold in Mumbai was Rs 40,779 plus 3 percent GST, while 24-carat 10 gram was Rs 44,519 plus GST. The 18-carat gold quoted at Rs 33,389 plus GST in the retail market.

Kumar Jain, Vice President of Mumbai Jewellers Association, told Moneycontrol that customers are postponing buying in anticipation of further lowering of prices and buyers generally avoid making purchases for the wedding season in the Holi period.

Once the price settles down and consumers are confident that there won't be further fall beyond a particular price then traction will pick up in the upcoming festival of Gudi Padwa and Akshay Tritiya along with wedding season in April and May, Jain added.

“Gold price will continue to be impacted by economic and social uncertainties. Despite the vitality in the gold price, gold has reinforced its safe-haven status banking on the uncertain economic scenario. As a result, the gold demand has strengthened. Overall, demand outlook for gold remains strong, as consumers are looking at the yellow metal as a dependable investment instrument.

Moreover, the proposal to reduce import duty on gold in the last budget has revived gold demand, and the gold jewellery retail prospect looks promising. Also, one shouldn't forget the fact gold is integral to the social and cultural ethos of the country. So, the demand for gold will always be there," said Ahammed MP, Chairman, Malabar Gold & Diamonds.

Bullion prices declined on a stronger dollar as traders and investors switched to the best alternative to gold. The dollar index rose by 1.20 percent nearing 92 mark last week.

The US dollar trades firm at 92.26, or up 0.30 percent, the highest since November 2020 against a basket of six rival currencies.

The 10-year US T-bond yield hovers near 1.6 percent after the US Fed Chairman signalled some spike in inflation by keeping mum about stepping up the bond-buying programme.

Market participants will keep an eye on GDP and inflation numbers from major economies slated to be released this week.

Gold holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund fell by 9.04 tonnes to 1,069.26 tonnes.

Spot gold was down $9.89 to $1,690.03 an ounce at 1236 GMT in London trading.

MCX Bulldesk eased 23 points or 0.16 percent, at 14,120 at 18:25. The index tracks the real-time performance of MCX Gold and MCX Silver futures.

“COMEX gold trades 0.5 percent lower near $1690/oz erasing the early gains. In the early session Gold had edged up on back of progress on the US stimulus front as the Senate approved the $1.9 trillion package which will now go to the House for a vote. However, weighing on price is continuing ETF outflows, upbeat non-farm payrolls data and higher US and global bond yields. Gold has to sustain above $1700/oz for some extended gains. However a sharp rise is unlikely unless US bond yields correct sharply”, said Ravindra Rao, VP- Head Commodity Research at Kotak Securities.

Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited said gold prices to test support level in the range of Rs 44,320-44,220 and on the upper side prices may get challenged in the level of Rs 44,580-45,630. The firm recently expands forex and comex services in Middle East Asia.

The gold/silver ratio currently stands at 67.99 to 1, which means the number of silver ounces required to buy one ounce of gold.

Silver prices soared by Rs 345 to Rs 65,473 per kg from its closing on March 5.

In the futures market, the gold rate touched an intraday high of Rs 44,780 and an intraday low of Rs 44,249 on the Multi-Commodity Exchange (MCX). For the April series, the yellow metal touched a low of Rs 44,217 and a high of Rs 51,931.

Gold futures for April delivery slipped by Rs 210, or 0.47 percent, at Rs 44,473 per 10 gram in evening trade on a business turnover of 12,581 lots. The same for June dropped Rs 131, or 0.29 percent, at Rs 44,735 on a business turnover of 5,081 lots.

The value of the April and June's contracts traded so far is Rs 2,792.63 crore and Rs 426.14 crore, respectively.

Similarly, Gold Mini contract for April edged lower Rs 222, or 0.50 percent at Rs 44,452 on a business turnover of 28,363 lots.

Trading Strategy

Tapan Patel, Senior Analyst (Commodities), HDFC Securities

Gold prices traded under pressure witnessing some pullback on Monday. The yellow metal was steady near $1700 levels after the U.S. Senate's passage of a $1.9 trillion stimulus package including $400 billion in one-time payments of $1,400. Gold prices have respected key support at $1690 per ounce on a weekly closing basis.

We expect gold prices to trade sideways to down for the day with COMEX spot gold support lies at $1,690 and resistance at $1,710. MCX Gold April support lies