Gold and silver futures lose early gains amid volatile trade

Kolkata: Gold and silver futures on Multi Commodity Exchange (MCX) opened higher on Thursday but they lost gains in volatile trade.

Analysts and bullion dealers said markets may remain volatile and see some consolidation in the coming sessions.

Gold for October 5 expiry opened at Rs 52,365 per 10 gm, up by Rs 111 per 10 gm over the previous day. Silver opened at Rs 67,280 per kg for September 4 expiry as compared to yesterday’s closing of Rs 66,753 per 10 gm, a gain of almost 0.8%.

At around 12.30 pm, gold on MCX was trading at Rs 51,995 per 10 gm. Silver too dwindled to Rs 66,800 per kg during the same time. But around 4 pm gold again regained a bit and MCX October gold was trading at Rs 52,081 per 10 gm. Silver too, went up to Rs 67,250 per kg.

Bullion dealers like Prithviraj Kothari, managing director, Riddhisiddhi Bullion said “Gold price will depend on quantitative easing by the banks. The central banks across the globe including the US Federal Reserve are engaging in quantitative easing, which means releasing billions of dollars in the economy to push growth. When this easing happens money will find its way into the yellow metal. The price of gold will depend on the movement of the US interest rate. Gold is now witnessing volatility and there may some consolidation too. But going ahead, gold will remain bullish.”

Large stimulus measures tend to support gold, which is often considered a hedge against inflation, said Sujit Dey, a Kolkata -based bullion dealer.

In the international market, spot gold was up 0.7% at $1,930.78 per ounce by 0034 GMT. However, US gold futures eased 0.5% to $1,940 per ounce. The dollar index fell 0.2% against its rivals, making gold less expensive for holders of other currencies.

Anuj Gupta, deputy vice-president, commodities and currencies Research, Angel Broking said “Weakness in dollar is supportive for gold and silver prices. Traders can buy gold at Rs 51,800 per 10 gm level with the stop loss of Rs 51,400 per 10 gm and for the target of Rs 52,500 per 10 gm level. Similarly, silver can be bought at Rs 66,500 per kg level, with the stop loss of Rs 64,000 per kg. The target can be anywhere at Rs 69,000 per kg."

Sriram Iyer, senior research analyst at Reliance Securities said “Domestic gold and silver are down from yesterday, tracking weak Comex futures. Markets could remain volatile and witness some consolidation in the coming sessions. Fall in the US treasury yields and weak US dollar limited the downside this Thursday morning. Markets will look ahead to the jobless claims data today and will await further triggers on the US stimulus bill. As of today, there is still an impasse between the US lawmakers on the relief bill.”