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Gold prices down for second day in a row, silver tanks Rs 2,741 per kg –

Gold prices dropped for the second straight day by Rs 381 to Rs 48,364 per 10 gram in the Mumbai retail market on muted global cues and rupee depreciation. The yellow metal traded lower tracking firm dollar, ETF outflow and market players assess the possibility of US stimulus deal.

Silver prices tumbled from eight year-high as investors booked profit and CME hike margin requirement affected the white metal.

The rate of 10 gram 22-carat gold in Mumbai was Rs 44,301 plus 3 percent GST, while 24-carat 10 gram was Rs 48,364 plus GST. The 18-carat gold quoted at Rs 36,273 plus GST in the retail market.

Colin Shah, Chairman, GJEPC said, “The reduction in import duty from 12.5 percent to 7.5 percent will help the Gem & Jewellery exports become globally competitive. Reduction in duty on raw materials would give a much-needed boost to the sector and help it to move to the next level. High duty on precious metal had made our exports uncompetitive leading to large Indian diaspora/NRI, moving to Dubai, Hong Kong, or other centres to buy jewellery which was largely impacting the employment as well as business in India. Along with this, the decrease of import duty on jewellery findings to 10 percent will help the jewelry manufacturer exporters in a big way. ”

The US dollar trades higher at 91.12, or 0.09 percent against a basket of six currencies.

China’s gold consumption fell by 18.13 percent in 2020 from a year ago to 820.98 tonnes, the China Gold Association said, as the COVID outbreak curtailed gold processing and dented retail consumption.

Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, decreased by 2.6 tonnes to 1,157.50 tonnes.

Spot gold edged lower by $16.90 to $1,843.84 an ounce at 1223 GMT in London trading.

MCX Bulldesk was down 335 points, or 2.14 percent, at 15,295 at 17:55. The index tracks the real-time performance of MCX Gold and MCX Silver futures.

Navneet Damani, Vice President, Motilal Oswal Financial Services (MOFSL) said, “Gold continues to trade lower, although the focus remained on silver as investors booked profits from a near eight-year peak. In this data-heavy week, after a neutral manufacturing PMI data from major economies, market participants will focus on the Service PMI from major economies, US nonfarm payroll data, and RBI policy meet on domestic bourses which could trigger further volatility.

The broader range on COMEX could be between $1,835- $1,865 and on the domestic front prices could hover in the range of Rs 47,800- Rs 48,450.

“COMEX gold trades lower near $1854/oz. Gold is choppy amid mixed trade in the US dollar index and as market players assess the possibility of a US stimulus deal. Support from rising virus cases, uneven global economic recovery, and hopes of higher Indian demand is countered by continuing ETF outflows which show weaker investor interest. Gold may continue to witness mixed trade reflecting a mixed trend in US dollar but general bias may be on the upside owing to global growth worries and the possibility of US stimulus”, said Ravindra Rao, VP- Head Commodity Research at Kotak Securities.

The gold/silver ratio currently stands at 68.79 to 1, which means the number of silver ounces required to buy one ounce of gold.

Silver prices crashed Rs 2,741 to Rs 70,302 per kg from its closing on February 1. 

In the futures market, the gold rate touched an intraday high of Rs 48,612 and an intraday low of Rs 48,011 on the Multi-Commodity Exchange (MCX). For the April series, the yellow metal touched a low of Rs 47,201 and a high of Rs 51,931.

Gold futures for April delivery slides Rs 620, or 1.27 percent, at Rs 48,100 per 10 gram in evening trade on a business turnover of 12,936 lots. The same for June slipped Rs 594, or 1.22 percent, at Rs 48,216 on a business turnover of 260 lots.

The value of the April and June’s contracts traded so far is Rs 3,014.93 crore and Rs 105.95 crore, respectively.

Similarly, Gold Mini contract for March declined Rs 601, or 1.23 percent at Rs 48,086 on a business turnover of 16,304 lots.

Trading Strategy

Tapan Patel, Senior Analyst (Commodities), HDFC Securities

Gold prices declined on lack of progress over the US stimulus package and in absence of fresh triggers. The traders and investors also rush to book some profits to avoid ant scrutiny after a recent buying spree in silver prices over Reddit posts.

We expect gold prices to trade sideways to down with COMEX gold resistance at $1,860, support at $1,830. MCX Gold April support lies at Rs 47,900 with resistance at Rs 48,600.

Kshtij Purohit, Product Manager Currency & Commodities, CapitalVia Global Research Limited

Technically, International gold bounced back from the resistance of $1,880-1,870 levels. The support of $1,830-1,820 may be tested in the upcoming sessions. On the domestic front, MCX Gold is resisting below Rs 48,750-48,900 levels and has already declined approximately 500 points since morning. Intraday support is at Rs 48,000 levels below which bears may dominate.

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