Gold price turns volatile, silver rates at Rs 60,900

Gold, Silver prices in India on September 22: Gold price gave up early gains and traded flat on Tuesday, as the resurgence of coronavirus cases in Europe and uncertainty on more fiscal stimulus to support the economy in the US crippled market sentiment.

Gold rose in early trade today after the dollar index fell 0.14 per cent to 93.52 against a basket of six currencies. Although investors took a cautious stance on the bullion later and focused on speeches by Federal Reserve policymakers on the US central bank's approach to inflation and stimulus measures.

Precious metals have also moved in tandem with global equity markets and turned red on a firm dollar and on cautious stance ahead of US Federal Reserve official's speech later this week. Broader markets sold off again on Tuesday as investors were also concerned about the fresh coronavirus-induced curbs, globally denting hopes of a swift economic recovery.

On the Multi Commodity Exchange, Gold October Futures fell Rs 41 at Rs 50,430, after hitting an intraday low of Rs 50,385 against the previous close of Rs 50,417 per 10 gm.

Silver September Futures, traded Rs 186 lower at Rs 61,130 per kg today after they touched an intraday low of Rs 60,956 per kg. Silver Futures hit a lifetime high of Rs 77,949 on August 7.

Concerns about tensions between the US and China, worries about the sluggish pace of economic recovery also kept investors pessimistic.

Overseas, gold and silver gained marginally, aided by a weak dollar. Spot gold rose 0.3% to $1,918.20. Comex gold was trading 0.65% higher at $1,913 per ounce, while US gold futures gained 0.6% to $1,921.50. Silver gained 1.1% to $25 per ounce.

In the international platform, gold slumped 3.4% in the previous session, while Silver spot slipped as well by more than 1%, amid concerns over fresh rounds of coronavirus-induced lockdowns across Europe.

Gold price falls to Rs 51,500, silver rates at Rs 67,500

Gold has gained nearly 26% so far this year in the international market as near-zero interest rates globally dented hopes of fast economic recovery from the pandemic. Since the beginning of the year, the yellow metal has risen 41.5% to life-time high of Rs 56,191 per 10 gm, hit on August.

US dollar gave up some of its gains and fell today as focus turned towards Central bank Chairman's testimony. US FOMC Chair will testify today before the House of Representatives. Commodity traders said investors awaited developments on the US fiscal stimulus by the Federal Reserve policymakers in the US.

Uncertainty about a fresh round of fiscal stimulus from Washington and concerns over tensions between world two largest economies and worries about the sluggish pace of economic recovery have kept trades muted recently.

Similarly, on the equities front, global markets tumbled after Wall Street declined for the third week, and most of the European indices slipped more than 2.00%. Domestic indices too fell for the fourth straight day, amid fears about the potential worsening of the coronavirus pandemic. The 30-share BSE benchmark Sensex was trading 290.04 points lower at 37,744.10 and broader NSE Nifty slipped 95.10 points to 11,155.45.

Investors were spooked amid a resurgence in COVID-19 infections across the world and European cities announcing new restrictions to curb the pandemic from spreading. Worldwide, there were 314 lakh confirmed cases and 9.69 lakh deaths from COVID-19 outbreak. Meanwhile, India's death toll from COVID-19 infections rose to 0.88 lakh and total coronavirus cases stood at 55.62 lakh as of Tuesday.

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 fell marginally to Rs 54,770. Price of 24-carat gold stood at Rs 53,830 per 10 gram in Chennai. In Mumbai and Kolkata, the rate for 24-Carat gold stood at Rs 51,310 and 53,440, respectively.

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Technical outlook

Expressing views on gold's trend, Anuj Gupta- DVP- Commodities and Currencies Research, Angel Broking said," Despite falling retail sales, the slowdown in consumer spending and a weak labour market in the US, the Federal Reserve expressed hopes of a paced recovery in the coming months which weighed on the safe haven, Gold. While the US Federal Reserve vowed to keep the interest rates low, no signs of further stimulus infusion to support the economy shackled by the pandemic further limited the gains for Gold.

Cameron Alexander, Director of Precious Metals Research at GFMS, Refinitiv said,"The rally in gold has been powered by a safe-haven appeal for the metal due to the worsening economic conditions resulting from an out-of-control pandemic. The central banks around the world continue to inject stimulus to resuscitate domestic economies, which has led in some cases to currency devaluation especially dollar and lower interest rates, further supporting the rally. Another factor that could disrupt the financial markets and support the gold rally is the political developments in the US."

"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. 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.

Gold prices may fall below Rs 50,000 in coming days; should you buy or wait?