India / Gold prices in India fall below ₹45,000, plunge 11% this year

New Delhi: Gold prices fell in Indian markets on Thursday, mirroring weakness in international trends amid rising US bond yields. On MCX, gold April futures were trading Rs 87 or 0.19 per cent down at Rs 44,861 per 10 grams. While silver May futures were seen ruling at Rs 67,497 per kg, down Rs 503 or 0.74 per cent. MCX gold has been falling due to rising 10-year bond yield which is currently at 1.45 per cent. US Dollar index, which is above 91, has also been hurting investor sentiment. On a week-on-week basis, the yellow metal has tumbled approximately 2 per cent. Following strong gains in 2020, rising 28.23 per cent in MCX, the yellow metal has been reeling under pressure amid volatile equity markets and rising bond yields. From a record high of Rs 56,191 per 10 grams in August 2020, MCX gold has tumbled Rs 11,330 or 20.16 per cent. While on a year-to-date (YTD) basis, gold has plunged Rs 5,417 or 10.78 per cent.

Jigar Trivedi, Fundamental Research Analyst, Anand Rathi Shares and Stock Brokers, told Financial Express Online, that the SPDR Gold ETF has witnessed liquidation for the 12th straight session. COMEX gold was seen trading lower near $1710/oz after a one per cent decline in the previous session. Now the focus has shifted to Fed Chair Powell’s virtual speech tonight for more cues.

Gold has been facing the dual challenge of rising bond yields and a strong US Dollar. Positive investor sentiment that the U.S. economy will see a stronger-than-expect recovery is pushing the U.S. dollar index above 91, its highest level in four weeks, says Bhavik Patel, Senior Technical Research Analyst, Tradebulls Securities. “Market is near its 55 month moving average of $1707 and below $1700 we cannot rule out further slippage till $1680-$1650,” Patel added. He also said that rallies will need to regain only above $1,760 which is the May high and previous 50% retracement. Patel said looking at sharp downside rally, some technical bounce back may not be ruled out from current levels before selling resumes

Gold prices in India have declined below Rs 45,000 per 10 grams, due to higher margins as compared to COMEX gold prices. COMEX Spot gold prices are holding support at $1690 per ounce. Tapan Patel, Senior Analyst (Commodities), HDFC Securities, told Financial Express Online that the risk on investment sentiment due to vaccine rollouts has dampened investment demand for yellow metal.

Time to buy, sell or hold the gold?

Bhavik Patel said that the next support for gold comes around Rs 44,500-44,200. The latest stimulus measures are bullish for gold in the long-term as they are expected to push inflation higher but in the short term, gold is still struggling. “We believe one should still hold their position in gold but for taking fresh positions either wait around Rs 44,200-44,000 or once gold sustains above Rs 45,500,” Bhavik Patel said.

On the other hand, Tapan Patel from HDFC Securities has advised short-term traders to adopt the ‘sell on rise’ strategy. While long-term investors can hold their long positions and add more on decline towards the Rs 44,800-44,500 range.

Even as the trend looks bearish, Jigar Trivedi from Anand Rathi sees it a good level to start accumulating. “There is further pain in price but jewellery demand will provide support around Rs 44,600-44,400,” Trivedi added. While Ajay Kedia, Director, Kedia Advisory said that traders should avoid calls as volatility is high. However, investors can look to accumulate as prices are almost down by Rs 11,500 per 10 gm.