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Gold, silver futures rise, but may see selling pressure

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Kolkata: Domestic gold and silver rose on Friday, tracking firm overseas prices. Bullion prices have gone up in international markets due to weak US dollar and data suggested that the world’s largest economy is struggling from a COVID-19-induced economic slump. Analysts feel that markets could consolidate over the next few sessions and may witness selling pressure.

October gold on Multi Commodity Exchange (MCX) opened at Rs 50,890 per 10 gm and touched a high of Rs 51,244. At around 12.30 pm, MCX October gold was trading at Rs 51,120 per 10 gm, up Rs 230.

MCX September silver opened at Rs 65,590 per kg, touched a high of Rs 66,200 per kg, and was trading at Rs 65,968 in early afternoon trade. In the international market, spot gold rose 0.4% to $1,936.64 per ounce by 0316 GMT. US gold futures rose 0.6% to $1,943.20 per ounce.

Navneet Damani, vice president (commodities research) at Motilal Oswal Financial Services “Gold slumped over 2% in volatile trading yesterday as US dollar and treasury yields rose higher after Federal Reserve chair Jerome Powell shifted the central bank’s inflation target in a widely expected move. The Fed’s new monetary policy strategy pledges to address “shortfalls” from the “broad-based and inclusive goal” of full employment and also promises to aim for 2% inflation on average.”

“On the other hand, talks regarding the new coronavirus relief bill is still a long way to go as Democrats and Republicans remained far apart over how much to spend on the same. On data front, US Q2 GDP has plunged by worst ever at -31.7% versus the expectation of -32.5%, and the weekly jobless claims were recorded in line with expectations, hence there was not much of an effect seen on the metal prices. Market participants today will keep an eye on the core PCE (personal consumption expenditure) price index expected later in the day. Also after the speech from Powell on yesterday, comments from Bank of England governor Andrew Bailey scheduled today will be in focus,” Damani added.

Sriram Iyer, senior research analyst at Reliance Securities said “So markets could consolidate over the next few sessions and could be data and dollar dependent. Technically, both gold and silver are trading on positive note from last session where prices can see some sideways to marginal downside momentum in coming sessions

Technically, both gold and silver are trading on positive note from last session where prices can see some sideways to marginal downside momentum in coming sessions.”

Anuj Gupta, deputy vice president, (commodities and currencies research) at Angel Broking expects selling pressure in gold and silver prices as the dollar held gains against major currencies after the Federal Reserve’s aggressive new strategy to lift employment and increased tolerance for higher inflation pushed US bond yields up.

Tapan Patel, senior analyst at HDFC Securities said spot gold prices at COMEX traded near $1940 after falling below $1930 while gold prices at MCX October contract traded flat near Rs 50,950 per 10 gm on rupee appreciation. “The spot rupee was trading around 41 paisa stronger against the dollar in the morning trade. Silver prices were trading nearly 1% up in COMEX and MCX getting support from firm base metals. Gold and silver prices are expected to trade in the current range with bullish bias for the day,” he added.

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