Gold prices slide globally on broad asset sell-off, stronger US dollar

Gold prices edged lower to Rs 47,282 per kg on March 11 on broader selloff across assets class, firm dollar and rising bond yields. The bullion metal was weighed down by US inflation surged to 13 years high as the economic recovery activity picked up the pace.

The commodity market was shut in the first half of the session on account of the Eid-ul-Fitr holiday.

Gold futures for June delivery dropped Rs 200, or 0.42 percent, at Rs 47,282 per 10 gram in evening trade on a business turnover of 7,603 lots. The same for August slipped Rs 225, or 0.47 percent, at Rs 47,767 on a business turnover of 6,423 lots.

The value of June and August’s contracts traded so far is Rs 256.31 crore and Rs 60.21 crore, respectively.

Similarly, Gold Mini contract for June declined Rs 149, or 0.31 percent at Rs 47,342 on a business turnover of 14,846 lots.

Spot gold was flat at $1,815.83 an ounce at 1222 GMT in London trading.

The US Labour Department data showed that the inflation jumped by 4.2 percent year-on-year, the highest since 2008 and above analysts’ projection of 3.6 percent rise.

The US dollar index traded higher at 90.73, up 0.06 percent in the evening trade against the major cross. 

Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded remained unchanged for the third day at 1,025.15 tonnes. The ETF has a market value of $60.33 billion.

The spot gold/silver ratio currently stands at 67.34 to 1 indicating that yellow metal has outperformed silver.

Technical

The precious metal has been trading lower than 5, 20 and 200 days’ moving averages but higher than the 50 and 100 moving averages on the daily chart. The momentum indicator Relative Strength Index (RSI) is at 53.68 which indicates sideways momentum in prices.

The retail gold price settled at Rs 47,764 per 10 gram in the Mumbai retail market yesterday and it is closed for trading today. The rate for 18, 22 and 24 carat gold were as Rs 35,823, Rs 43,752 and Rs 47,764 plus 3 percent GST. 

Suvankar Sen, CEO, Senco Gold & Diamonds said, “Gold prices have increased by almost 5 percent in the last one month and it is a safe investment and hedge against inflation. Consumer demand though, as compared to previous years, has taken a hit as stores are either closed or are operating only for few hours because of the lockdown and restrictions across states to break the chain of coronavirus spread.” 

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