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Gold price falls amid strong dollar; silver rates at Rs 61,200

Rupa Burman Roy     September 30, 2020

Gold, Silver prices in India on September 30: Gold price slipped in the Indian commodity market on Wednesday tracking weakness from overseas although traded above the key psychological level of Rs 50K.

On the Multi Commodity Exchange, Gold October Futures fell by Rs 177 to Rs 50,450, after hitting an intraday high and low of Rs 50,515 and Rs 50,350, respectively. Yesterday, gold futures on MCX surpassed 50K mark and closed at Rs 50,652 per 10 gm. The bullion, however, trades almost Rs 6,000 lower than its lifetime high of Rs 56,191 per 10 gm hit last month.

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Silver September Futures, traded Rs 1210 lower at Rs 61,255 per kg today after they touched an intraday low of Rs 61,020 per kg. Silver Futures hit a lifetime high of Rs 77,949 on August 7.

Overseas, Spot gold fell 0.5% to $1,889.66 per ounce, after hitting a one-week high of $1,899.12 earlier in the session. U.S. gold futures were down 0.4% at $1,895.40, while Comex gold was trading 0.20% lower at $1,890 per ounce. Silver too eased 1.1% to $23.91 per ounce.

Global rates of the bullion metal fell marginally and traded in a temporary consolidation phase, as US dollar headed for its biggest monthly rise since July 2019, making gold costlier for holders of other currencies.

The dollar index was trading 0.1% higher against rivals after Republican Donald Trump and his Democratic rival Joe Biden had their first US presidential debate ahead of the November US elections. Market participants also reacted to the release of key economic data for September.

Gold price trades above Rs 50,000 post six-day fall; Silver at Rs 60,000

Upbeat Chinese data on manufacturing and services activity and the ongoing tug-of-war over the new aid package in the US also kept sentiments tepid for the safe-haven asset.

Gold has risen over 25% this year, supported by monetary stimulus from major central banks and on news of fresh rounds of coronavirus-induced lockdowns across Europe and Britain.

Viewed as a hedge against inflation and currency debasement, the bullion has risen substantially this year amid rising worries about the sluggish pace of economic recovery due to the coronavirus pandemic. Worldwide, there were 338 lakh confirmed cases and 10.12 lakh deaths from COVID-19 outbreak. India's COVID-19 caseload breached the 62-lakh mark and the death toll from COVID-19 infections rose to 0.97 lakh, as of today.

On the retail front, physical 24-carat bullion per 10 gram in the national capital gained to Rs 53,360. Price of 24-carat gold stood at Rs 53,540 per 10 gram in Chennai. In Mumbai and Kolkata, the rate for 24-Carat gold gained back to Rs 50,010 and 52,4220, respectively.

"Going forward, clarity on fiscal stimulus in the US, control on the number of COVID cases worldwide, or a vaccine will guide gold prices", said Nish Bhatt, Founder & CEO, Millwood Kane International.

On Gold's near term outlook, Hareesh V, Geojit's head of commodity research said," Gold is likely to be choppy ahead of the first US Presidential election debate. Even though a strong US dollar and optimism over COVID-19 vaccine is weighing the safe-haven demand of gold, increasing US-China tensions and hopes of fiscal stimulus measures continue to offer lower-level support to the commodity.

On London spot technical outlook, he added," If prices hold the support of $1840, we can expect a rebound, but it needs to break $1920 to continue the momentum. An unexpected drop below $1820 would extend further selling pressure later."

As per Geojit Financial Services, MCX Gold August futures resistance is placed at 51120 and support is at 49200. For MCX Silver August futures, the resistance is at 64800 and the support is placed at 55950.

On Silver Mini Nov/LBMA Spot Silver, the brokerage said in its note," Prices needs to break $24.60 to continue up-ticks initially. Else, expect a choppy with mild negative bias trading for the day. Anyhow, an unexpected drop below $22.40 would liquidate prices further. "

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