US, nonfarm payrolls data showed jobs growth unexpectedly slowed in April, pushing the dollar to an over two-month trough, making gold less expensive for holders of other currencies. The return of discretionary capital flowing into gold alongside strong physical demand from China and India last month prior to Indian lockdowns also supported the yellow metal.
Speculation that growing price pressure would erode the dollar’s value kept the U.S. currency near a 2-1/2-month low. By late Monday, the dollar index, which measures the greenback against six major currencies, had pared losses to stand at 90.302.
Physical gold demand in India dived last week as shops shuttered and people turned cautious due to surging coronavirus infections across the world’s second-largest bullion consumer.
Gold futures on MCX were up 0.38 per cent or Rs 181 at Rs 47,932 per 10 grams. Silver futures fell 0.17 per cent or Rs 119 to Rs 71,425 per kg.
In the spot market, highest purity gold was sold at Rs 47,788 while silver was priced at Rs 71,696 on Monday, according to the Indian Bullion and Jewellers Association.
“Gold prices traded firm with spot gold prices at COMEX were trading near $1836 per ounce in the morning trade. The yellow metals held near three month highs on inflation hedge and slower economic recovery. Traders and investors are betting on bond market movement over inflation concerns adding gold to their portfolio,” said Tapan Patel, Senior Analyst (Commodities), HDFC Securities.
Trading strategy
“We expect gold prices to trade sideways to up for the day with COMEX gold support at $1820 and resistance at $1850 per ounce. MCX Gold June support lies at Rs. 47600 and resistance at Rs. 48200 per 10 gram,” added Patel.
Global markets
Spot gold rose 0.4 per cent to $1,836.89 per ounce by 1:44 p.m. EDT (1744 GMT), after touching its highest since Feb. 11 at $1,845.06. U.S. gold futures settled 0.3 per cent higher at $1,837.60.
Palladium rose 1.5 per cent to $2,971.39 per ounce after hitting an all-time high last week on supply shortfall worries. Silver eased 0.2 per cent to $27.39 per ounce, while platinum climbed 0.8 per cent to $1,258.87 per ounce.
