US consumer prices surged in April, with a measure of underlying inflation blowing past the Federal Reserve’s 2 per cent target and posting its largest annual gain since 1992. If the US economy recovers quickly and inflation continues to heat up, gold will be in ample demand.
The US 10-year Treasury yield fell to 1.593 per cent, reducing the opportunity cost of holding non-interest bearing gold. The dollar index stood at 90.062, near a five-month low.
SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.1 per cent to 1,043.21 tonnes on Friday from 1,044.08 tonnes on Thursday.
Physical gold demand in India, the second-biggest bullion consumer, was negligible last week as most jewellery stores are still shut due to Covid lockdowns, forcing dealers to offer steep discounts. However, investors have fancied Gold ETF for hedging in the domestic markets.
The Sovereign Gold Bond Scheme 2021-22, Series-III or the third tranche will be open for subscription from May 31 to June 4, 2021. The issue price has been fixed at Rs 4,889 per gram.
Gold futures on MCX were up by 0.35 per cent or Rs 173 at Rs 49,323 per 10 grams. Silver futures rose by 0.58 per cent or Rs 414 to Rs 72,025 per kg.
“COMEX gold trades marginally higher by 0.35 per cent near $1912/oz after a 0.4 per cent gain on Friday. Gold continues to hold above $1900/oz as Fed and other central banks emphasize on continuing with loose monetary policy,” Ravindra Rao, CMT, EPATVP-Head Commodity Research at Kotak Securities.
In the spot market, highest purity gold was sold at Rs 48,654 while silver was priced at Rs 70,500 on Friday, according to the Indian Bullion and Jewellers Association.
“However, ETF outflows and weaker demand in India amid continuing virus related restrictions might cap the gains. Gold has continued to hold above $1900/oz, however any sustained rise may be challenged by a pause in the US dollar index fall.”
Trading strategy
“We expect gold prices to trade sideways to up for the day with COMEX gold support at $1890 and resistance at $1920. The US market is closed on Monday on Memorial Day Holiday. MCX Gold June futures support lies at Rs. 48400 and resistance at Rs. 49000 per 10 gram,” said Tapan Patel, Senior Analyst (Commodities), HDFC Securities.
Global markets
Spot gold was steady at $1,903.25 per ounce by 0036 GMT. US gold futures edged 0.1 per cent higher to $1,907 per ounce.
Palladium fell 0.2 per cent to $2,819.14 per ounce, silver gained 0.2 per cent to $27.94 and platinum rose 0.5 per cent to $1,182.74.
