Gold prices in India started the week with marginal gains on Monday despite a rise in the dollar and ahead of data on consumer prices in the US due this week. Silver, however, declined to trade below the Rs 63,400 per kilogram mark.
At 9:17 am, Multi Commodity Exchange (MCX) gold futures for October delivery traded with a gain of Rs 90 or 0.2 percent at Rs 46,896 per 10 grams compared with their previous close of Rs 46,806 per 10 grams. MCX Silver December futures were at Rs 63,374 per kilogram, down by Rs 218 or 0.3 percent compared with the previous close of Rs 63,592.
Weakness on Dalal Street shifted investors' focus to safety bets such as bullion. In early deals, Sensex and Nifty50 fell 0.4 percent amid volatile trade. Selling pressure in financial and consumer stocks weighed on the benchmark indices.
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Globally, gold and silver rates were subdued on Monday. Cautious investors awaited readings on US consumer prices due this week for more clarity on the possible timing of the Federal Reserve’s decision to exit its ultra-supportive policy.
Spot gold was flat at $1,787.4 per ounce, following a weekly decline of 2.1 percent. US gold futures were down 0.3 percent at $1,786.9 an ounce. Silver was flat at $23.7 per ounce.
"Gold prices are vulnerable after the steel fall last week and trading below $1790/oz while higher Treasury yield and a strong dollar are key drivers for this price correction. The longer it stays below $1,800 the more it is at risk of another sell-off with the next key daily support at $1,700/oz," said Sandeep Matta, Founder, TRADEIT Investment Advisor.
The volatility in the global equity markets is increasing which could be the new catalyst the gold market participants are currently eyeing at, he added.
The dollar index -- which gauges the greenback against six other currencies -- strengthened 0.1 percent to 92.7 in early Asian trade, making precious metals more expensive for those holding other currencies.
Meanwhile, physical gold demand in India was subdued last week despite a correction in bullion prices. Consumers in most other Asian hubs also stayed on the sidelines.
The rupee ended with a gain of 10 paise at 73.50 against the US dollar on Thursday, snapping a three-day losing streak. At that level, it is down 1.4 percent so far in 2021.
For the week, however, it weakened against the US currency on importer hedging and a consistent rise in the dollar index.
Manoj Kumar Jain, Director-Head of Commodity Research, Prithvi Finmart, expects both precious metals to remain volatile this week. "Rising Covid cases and geopolitical tensions are supporting precious metals at lower levels," he said.
He expects support for spot gold at $1,774-1,762 per ounce and resistance at $1,800-1,812 an ounce.
On MCX, gold futures find support at Rs 46,600-46,440 and meet resistance at Rs 47,000-47,220, he said. For silver, he sees resistance at Rs 63,900-64,200 levels and support at Rs 63,100-62,800.
Time to take positions?
Jain recommends buying gold futures on dips to around Rs 46,620 for a target of Rs 47,050 with a stop loss at Rs 46,440.
"The technical chart is again showing some short-covering rally in bullion. Momentum indicator RSI also indicating the same in hourly as well as 4 hourly chart. So traders are advised to create fresh buy positions in gold and silver in small dips near given support levels, traders should focus on important technical levels for the day," said Amit Khare, AVP- Research Commodities, Ganganagar Commodities.
October Gold: Support 1 - Rs 46,600, Support 2 - Rs 46400; Resistance 1 - Rs 46,950, Resistance 2 - Rs 47,100.
December Silver: Support 1 - Rs 63,100, Support 2 - Rs 62,500; Resistance 1 - Rs 64,000, Resistance 2 - Rs 64,600.
First Published: Sept 13, 2021 9:32 AM IST
