Gold futures test Rs 49,350/10 gm level. What analysts say

Domestic gold futures gave up initial gains on Tuesday but managed to hold the Rs 49,000 per 10 grams mark, as a stronger dollar overseas made the yellow metal less attractive for those holding other currencies. Investors awaited US inflation data for more clarity on interest rates in the world’s largest economy going forward.

MCX gold futures for delivery on August 5 gained by Rs 207 to touch the Rs 48,932 per 10 grams mark on Tuesday before easing. In late evening trade, the contract quoted at Rs 49,087 per 10 grams, down by Rs 56 or 0.11 per cent from its previous close.

MCX silver futures for delivery on July 5 fell during the session, and were last ween trading down by Rs 551 or 0.77 per cent at Rs 71,266 per kilogram. The contract had moved within a Rs 819 range, between Rs 70,980 and Rs 71,799, earlier on Tuesday.

Spot gold (22 carat) became dearer by Rs 190 to settle at Rs 48,320 per 10 grams in the national capital. Silver followed suit, rising by Rs 125 to Rs 70,227 per kilogram in New Delhi.

In the international market, spot gold was down 0.44 per cent at $1,890.92 per ounce and spot silver 0.90 per cent at $27.63 per ounce.

The dollar index — which gauges the greenback against six major peers — quoted firm above the 90 mark, and was last seen trading up 0.15 per cent at 90.08.

Back home, the rupee declined by nine paise to end at 72.89 against the dollar.

On Dalal Street, benchmark indices took a breather and retreated from record high levels amid profit booking seen in heavyweights such as HDFC twins and Reliance Industries, providing some support to bullion prices. The S&P BSE Sensex index ended 52.94 points or 0.10 per cent lower at 52,275.57 and the broader NSE Nifty 50 benchmark settled at 15,740.10, down 11.55 points or 0.07 per cent from its previous close.

Typically, gains in equities boost the risk appetite of investors, rendering safe-haven bets such as gold less attractive, and vice versa.

Analysts say higher US consumer inflation could spark some fears over tapering of monetary policy by the US central bank, putting pressure on bullion rates.

“Positive economic data last week and comments from US Treasury Secretary on the $4 trillion budget plan, underplaying inflation, have weighed on the metal prices,” said Navneet Damani, VP-Commodities Research, Motilal Oswal Financial Services.

Where are precious metals headed?

Damani said he expects Comex gold to move in a broader range of $1,883-1,908 in the near term. On MCX, the yellow metal could hover between Rs 48,850 and Rs 49,250, he added.

Technical view

MCX gold has support at Rs 48,980-48,750 and resistance at Rs 49,330-49,550, according to Manoj Kumar Jain, Director-Head of Commodity Research, Prithvi Finmart. Silver has support at Rs 71,200-70,700 and resistance at Rs 72,200-73,000, he added.

Jain suggests buying gold on dips around Rs 49,000 for a target of Rs 49,550 with a stop loss at Rs 48,750, and going long on silver around Rs 71,300 for a goal of Rs 72,500 with a stop loss at Rs 70,600.

Market participants will watch the US consumer price index reading closely to assess the Fed’s policy moves in the near term.