Gold & Silver

After weak opening, Gold firms up on buying at lower levels

Rutam Vora Ahmedabad | Updated on November 22, 2021

Bullion remains under pressure on profit booking

Gold futures opened weak on Monday at ₹ 48,775 per 10 grams for the December contract, down ₹947 from previous close on the Multi Commodity Exchange (MCX). Silver December Futures opened flat on MCX at ₹65,541 per kg on Monday, lower by ₹15 over previous close.

The precious metals, however, recovered from the lows and returned to positive territory in the first hour of the trade.

Fast four on Bullion

1. Opening weakness?

Gold and silver prices remained under pressure on profit booking from the 9-month peak levels. However, the haven demand didn't taper off amidst US and European economic uncertainties and the yellow metal remained a preferred asset-class to pick on dips. The first hour of trade on MCX showed gold making some recovery from its opening lows of ₹48,766. Silver, too, tracked gold on recovery path gaining by over ₹100 from its opening lows in the initial trades.

2. Spot movements

Spot gold was weak as festive purchases slowed after sparkling Diwali sales a fortnight ago. For the week ended November 18, gold posted marginal gains of 0.5 per cent to settle at ₹49,235 per 10 grams (999 purity) as last quoted by the India Bullion and Jewellers Association (IBJA). In India, spot gold prices were on a steady upside gaining by 4 per cent within a month from ₹47,387 on October 18 to ₹49,235 on November 19. A significant contribution to the price rise came from the festive demand push besides the international price pressure.

3. International Gold

The CME Gold futures for December was last quoted at $1849.5 an oz (an ounce is equal to approx. 28.3 grams) on November 21, 0.1% down from previous close. This is lower by over 1 per cent from the recent highs of $1870 quoted on November 3. Analysts maintained that the yellow metal weighed down by gains in the dollar after Federal Reserve Governor Christopher Waller called for early tapering of economic support to help chart a tighter monetary policy. Adding to the weakness is the softening of demand for the yellow metal in the Asian countries such as India and China owing to high price levels in recent months.

4. Outlook:

An Angle Broking report stated that chances of a rate hike by the US FED might weigh on Gold prices; however, rising inflation and global uncertainties is expected to support the safe haven asset in the week ahead. In the domestic markets, the gold prices are expected to trade sideways with positive bias. Kedia Advisory on Gold showed trading range for Monday between ₹48,351-49,547. For silver, it has shown a trading range for the day between ₹64,753-66,649.

Published on November 22, 2021

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