Gold prices edge higher, trades above Rs 47,000; check MCX gold support, resistance levels

Physical demand in India has also taken a hit after severe second wave of Covid with many states imposing restrictions and lockdown

Gold prices were trading higher in Indian markets on Wednesday, even as international rates were flat. On the Multi Commodity Exchange, gold June futures were trading Rs 139 or 0.30 per cent up at Rs 47,010 per 10 grams, as against the previous close of Rs 46,871. Silver July futures were ruling at Rs 70,045 per kg, up Rs 396 or 0.57 per cent. In the previous session, silver futures ended at Rs 69,649 per kg. The general risk aversion due to covid crisis and corresponding demand for safe-haven is not letting it fall below the 46500, an analyst said. “But the next catalyst is the US non-farm payrolls report due out this Friday. An upbeat data can give DXY some bounce, pressing gold prices lower. A break of 46500, may push MCX prices towards 45000 and then 44500, while 48450 will act as a crucial resistance,” Rahul Gupta, Head of Research-Currency at Emkay Global Financial Services, told Financial Express Online.

In the previous session, gold and silver saw a sharp fall, as the market was caught by surprise after Treasury Secretary Janet Yellen conceded on Tuesday that interest rates may have to rise in order to contain inflation. “It may be that interest rates will have to rise somewhat to make sure that our economy doesn’t overheat, even though the additional spending is relatively small relative to the size of the economy,” she said. These comments came after 48 hours where she downplayed rising inflation pressure thus creating confusion. The comments prompted the US dollar to soar while precious metals saw sharp fall.

“The way US economic recovery is gaining pace, the market is now factoring that ultra loose monetary policy may not remain the same in the foreseeable future and interest rate rising may come next year,” Bhavik Patel, Senior Technical Research Analyst, Tradebulls Securities, told Financial Express Online. Physical demand in India has also taken a hit after severe second wave of Covid with many states imposing restrictions and lockdown. Premium for physical gold has eroded and now is trading at a discount of $2. Gold also has headwinds in the form of ETF outflows. “We believe gold needs to break $1800 to gain upside momentum. In MCX, we continue to remain bullish until 46450 is not taken out. Next trigger for gold would be Friday’s US Non-Farm payroll data which will give indication how strong the US economy is recovering,” Patel said.