Gold slides for 4th day, slips to Rs 44,843/10 gm on firm dollar; silver crashes by Rs 1,793 a kg

Gold prices continued to fall for the fourth day on March 4. The price of the precious metal slipped by Rs 274 to Rs 44,843 per 10 gram in the Mumbai retail market on a stronger dollar and subdued global cues. The yellow metal was weighed down by increased appetite for riskier assets. Additionally, elevated US Treasury yields dented safe-haven appeal.

The bullion prices have declined by Rs 1,727 or 3.70 percent in the first four days of March in the domestic market. It has slipped by Rs 5,359 or 10.68 year-to-date (YTD).

The rate of 10 gram 22-carat gold in Mumbai was Rs 41,076 plus 3 percent GST, while 24-carat 10 gram was Rs 44,843 plus GST. The 18-carat gold quoted at Rs 33,632 plus GST in the retail market.

The 10-year US T-bond yield eased a bit to trade near 1.45 percent but remain in sight of the February 2021 high of 1.61 percent hit last week.

The US dollar traded higher at 91.19, or up 0.28 percent against a basket of six rival currencies.

Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, decreased by 4.7 tonnes to 1,082.38 tonnes, the lowest since May 2020.

Spot gold was up $8.22 to $1,719.36 an ounce at 12:39 GMT in London trading.

MCX Bulldesk fell by 61 points or 0.43 percent, at 14,289 at 18:11 hours. The index tracks the real-time performance of MCX Gold and MCX Silver futures.

Jigar Trivedi, Research Analyst- Commodities Fundamental, Anand Rathi Shares & Stock Brokers said, “MCX gold has declined for yet another session as the rising 10Y bond yield (1.45%) & DXY above 91 has hurt the sentiment these days. On MCX gold is down by approx. 2% now this week. The SPDR Gold ETF has witnessed liquidation for the 12th straight session. Comex gold has crucial support of $1,700. Focus is on Fed Chair Powell's virtual speech tonight for more cues. The trend is bearish but it's a good level to start accumulating. There is further pain in price but jewellery demand will provide support around Rs 44,600 - Rs 44,400.”

“COMEX gold erased some of the early losses as it trades near $1713/oz. Gold remains pressurized by higher bond yields and weaker investor interest. However, supporting price is mixed economic data from major economies, renewed virus concerns, central bank’s emphasis on loose monetary policy and hopes of additional US stimulus measures. Gold may remain under pressure unless US bond yields correct or we see concrete measures on US stimulus. Technical rebound possible as the prices are in highly overbought zone”, said Ravindra Rao, VP- Head Commodity Research at Kotak Securities.

The gold/silver ratio currently stands at 67.81 to 1, which means the number of silver ounces required to buy one ounce of gold.

Silver prices tumbled by Rs 1,793 to Rs 66,126 per kg from its closing on March 3. 

In the futures market, the gold rate touched an intraday high and low of Rs 44,886 and Rs 44,566, respectively, on the Multi-Commodity Exchange (MCX). For the April series, the yellow metal touched a low of Rs 44,561 and a high of Rs 51,931.

Gold futures for April delivery fell by Rs 120, or 0.27 percent, at Rs 44,828 per 10 gram in evening trade on a business turnover of 13,254 lots. The same for June slipped Rs 82, or 0.18 percent, at Rs 45,030 on a business turnover of 4,109 lots.

The value of the April and June’s contracts traded so far is Rs 2,823.26 crore and Rs 219.84 crore, respectively.

Similarly, Gold Mini contract for April edged lower by Rs 64, or 0.14 percent at Rs 44,901 on a business turnover of 29,823 lots.

Trading Strategy

Tapan Patel, Senior Analyst (Commodities), HDFC Securities

Gold prices have kept a lower trading range on stronger dollar and rise in US treasury yields. The vaccine rollouts have boosted risk-on sentiments lowering safe haven demand for precious metals. The traders may await comments from the US FED chairman later tonight.

We expect gold prices to trade sideways to lower for the day with COMEX spot gold support lies at $1,700 and resistance at $1,740. MCX Gold April support lies at Rs 44,600 and resistance lies at Rs 45,200.

Navneet Damani, Vice President, Motilal Oswal

Gold longs are unable to shake off their misery yet, with the metal suffering its sixth setback in seven days as prices hovering around $1,700 level. Volatility in the Dollar and US yields is giving direction to the metal prices. Gold might get some reprieve if Federal Reserve Chairman Jerome Powell casts a less favorable outlook for the economy in his speech this week at an event hosted by WSJ. The US Senate delayed the start of debate on a $1.9 trillion COVID-19 relief bill until at least Thursday. 

While on the data front, US private payrolls increased less than expected in February, suggesting the labour market was continuing to struggle. Apart from the Fed Chair's speech, market participants will also keep an eye on the weekly jobless claims data. The broader range on COMEX could be between $1695- $1740 and on the domestic front, prices could hover in the range of Rs 44,430- Rs 45,275.

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