Synopsis: Gold has corrected again after failing to hold over the 1836/oz mark, although it remains above $1800/oz. Gold, like equities, is likely to continue volatile, but if US non-farm payrolls data disappoints, we may see some rebound.
In opening trade on Monday, India Gold MCX October futures fell over 1%, reflecting a drop in international spot prices that plummeted to a more than four-month low as strong U.S. jobs data fueled fears that the Federal Reserve will hike rates sooner than expected.
Gold slid 2.3% to $1,722.06 per ounce on the spot market. According to a Reuters report, prices hit $1,684.37 earlier in the day, their lowest since March 31. The data lifted the dollar and 10-year Treasury yields, reducing gold’s appeal as an inflation hedge, according to the report.
October gold contracts were trading 1.4% down at Rs 45,981 for 10 grams at 0930 hours on the Multi-Commodity Exchange (MCX). Silver futures for September were down 1.9% at Rs 63,730 per kg.
In worldwide markets on Friday, gold and silver prices ended the day on a down note. The gold futures contract for December finished at $1,763.50 per troy ounce, while the silver futures contract for September settled at $24.33 per troy ounce.
Domestic markets ended the day on a sour tone as well. Gold and silver prices plummeted on Friday as the dollar index and benchmark 10-year bond yields rose in response to good U.S. job statistics.
“The gold saw its worst crash in the prices since April 2020 reacted to stronger than expected U.S. non-farm payroll data. Strong U.S. job data also send a signal to the Federal Reserve to lay out its plan to reduce bond purchases by early 2022,” Manoj Kumar Jain, Director, Head-Commodity & Currency Research, Prithvifinmart Commodity Research.
“We expect both the precious metals to remain weak in Monday’s session and could show further weakness amid strong gains in the U.S. equities and strength in the dollar. Gold could test $1710 per troy ounce levels again. Gold has support at $1734-1710, while resistance at $1778-1792 per troy ounce,” he said.
Silver has support around 64100-62800 and resistance at 66200-67100 levels on the MCX, while gold has support at 46300-45950 and resistance at 46920-47200. “We suggest selling in gold below 46600 with a stop loss of 46920 for the target of 45800 and in silver below 65000 with a stop loss of 66100 for the target of 63200,” recommend Jain.
Expert: Sriram Iyer, Senior Research Analyst at Reliance Securities
Gold and silver prices fell sharply on Friday after a good employment report in the United States raised anticipation that the Federal Reserve will start unwinding its economic stimulus sooner than expected.
On Friday, domestic gold and silver prices fell, matching international values. The bullion index finished down, mirroring lower gold and silver prices in the United States. Domestic gold and silver prices, as well as Bullion Index futures, will begin the day with a gap-down trading, matching international levels.
On the domestic front, if the MCX Gold October contract opens below 46650, the futures may continue to fall up to 46380-46100 levels. The levels of resistance are 46800-47000. On the domestic front, the MCX Silver September contract is holding below 65000, with 64090-63200 levels possible. The levels of resistance are 65500-66250.
