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Gold price rises for third day; silver rates at Rs 69,100

Rupa Burman Roy     September 16, 2020

Gold, Silver prices in India on September 16: Gold prices held steady on Wednesday for the third straight session amid weak dollar as investors waited for the outcome of the FOMC meeting, hoping that Fed policymakers would maintain a dovish policy.

Positive developments around potential COVID-19 vaccines after AstraZeneca resumed its phase-3 trial capped gains in the commodity.

On the Multi Commodity Exchange, Gold October Futures gained Rs 166 at Rs 51,935, after hitting an intraday high of Rs 51,943 against the previous close of Rs 51,769 per 10 gm. MCX gold futures currently trade over Rs 4,248 lower than the lifetime high of Rs 56,191 per 10 gm, hit on August 7. Since the beginning of the year, the yellow metal has risen 41.5% to life-time high on MCX.

Silver September Futures, gained Rs 108 to Rs 69,075 per kg today after they touched an intraday high of Rs 69,105 per kg. Silver Futures hit a lifetime high of Rs 77,949 on August 7.

Overseas, gold and silver held steady following a sharp rise in the earlier session. Spot gold was up 0.1% to $1,957.45 per ounce. Comex gold was also rising 0.2% to $1,959.18 per ounce, while US gold futures were steady at $1,966.20. Silver, on the other hand, fell 0.1% to $27.20 per ounce.

Commodity analysts said traders are awaiting the outcome of the US central bank's two-day policy meeting that could provide more cues on stimulus measures and inflation targeting. This will be the first meet since Fed Chairman Jerome Powell unveiled a policy shift towards more inflation tolerance in August, raising expectations that the central bank would keep interest rates ultra-low to support the economy.

Gold, used as a hedge against inflation and currency debasement, has recently turned bullish aided by a weak dollar. During last week, gold prices showed a mixed trend, on the back of a recovery in the dollar over rising demand from banks.

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Escalating tensions between US & China amid a rising number of infections around the globe not only dented hopes of a fast economic recovery but also boosted the appeal for safe-haven assets.

Traders said investors rushed to the safe-haven asset as the number of coronavirus cases rose in the United States and some other countries, re-imposing anti-disease controls that disrupt businesses. Worldwide, there were 297.27 lakh confirmed cases and 9.39 lakh deaths from COVID-19 outbreak. Meanwhile, India's death toll from COVID-19 infections rose to 82,091 and total coronavirus cases climbed to 50.20 lakh as of Wednesday.

On the equities front, Asian indices were mostly trading positive on optimism around coronavirus vaccine trials. Increase in US factory production and better than expected Chinese IIP and retail sales data also helped to keep markets optimistic. Although gains were checked, as market participants also awaited outcome from the Federal Reserve concluding its two-day policy meeting on Wednesday.

On the retail front, physical gold dealers continued to offer discounts in India as the precious metal's demand fell due to high prices. In India, 24-carat bullion per 10 gram in the national capital crossed to Rs 55K mark today. Price of 24-carat gold gained to Rs 54,030 per 10 gram in Chennai. In Mumbai and Kolkata, the rate for 24-Carat gold stood at Rs 51,460 and 53,610, respectively.

Gold price rises for second day; silver rates at Rs 69,600

Technical outlook

Commenting on gold prices, Anuj Gupta, DVP- Commodities and Currencies Research, Angel Broking said, "Weakness in dollar support the gold and silver prices. US Federal meeting would be an important event for further trend decider. The Federal Open Market Committee will provide its quarterly update on where it sees GDP, unemployment and inflation heading. Expectations from the Fed have increased amid a stalemate in talks for fiscal relief and economic reports suggesting an uneven recovery from the coronavirus-induced recession."

On Gold futures technicals, he added," As for today traders can go for buy-in gold at Rs 51,700 levels with the stop loss of Rs 51,400 levels for the target of 52,300 levels. They can also go for buy-in Silver  at Rs 68,600 levels, with the stop loss of 68,000 levels and for the target of 69,800 levels."

Cameron Alexander, Director of Precious Metals Research at GFMS, Refinitiv said,"Looking ahead, the focus will continue to be on the coronavirus developments worldwide and on fresh economic data coming out of the United States which will influence the price of gold in the short to medium term. Another factor that could disrupt the financial markets and support the gold rally is the political developments in the US. Investors will be monitoring just how quickly the world's largest economy can return to expansion mode and how soon an economic relief bill will be finalised," he added.

On Silver, Prathamesh Mallya, AVP- Research, Non-Agri Commodities and Currencies, Angel Broking said," Easy money policy of central banks, weakness in the US dollar, rising investment demand, and the belief of investors in silver as an asset class is resulting in optimism for price."

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