After a Massive Crash Bullion Market, How to Trade in Gold?

Bullion Market : Gold and silver futures prices in the domestic market dipped further on Monday, following the massive fall in the previous session, as the US dollar firmed and economic conditions showed improvement.

Most economic indicators are showing swift recovery in the economy. Moreover government finances are also strengthening, leading to fund flows away from gold, which is considered an hedge against crisis. On Friday, it plunged over Rs 2,000 per 10 gram on MCX.

Gold futures on MCX were down 0.39 per cent or Rs 193 at Rs 48,774 per 10 grams. Silver futures slipped 0.37 per cent or Rs 237 to Rs 63,994 per kg. The profit booking follows the trend in the international market.

COMEX gold has seen a volatile start to the week and has moved in a wide range of $1,856-$1,817.1/oz and is currently trading 0.4 per cent lower near $1,829/oz. Gold trades mixed as support from disappointing US jobs report, hopes of higher US stimulus, rising virus cases are countered by sharp rebound in US dollar index on back of rise in US bond yield to March 2020 highs,” said Ravindra Rao, VP- Head Commodity Research at Kotak Securities.

ETF investors moved to the sidelines on Friday. After a sharp fall in the last few weeks, the US dollar is attempting some recovery and this could keep pressure on gold prices, however we do not expect a sustained decline with increased expectation of additional stimulus.”

In the spot market, Gold prices fell Rs 614 to Rs 49,763 per 10 gram in the national capital on Friday, tracking a weak global trend. Silver prices also plunged Rs 1,609 to Rs 67,518 per kilogram.

Gold Rates – Spot & Futures (.995 purity)(MCX)

DateGold Spot Price
Rs/10 Grms (AHMEDABAD)
Gold Future Price
Rs/10 Grms Expiry: 05-Feb-2021
12-01-20214926749514
08-01-20215067948965
07-01-2021050926
05-01-2021051480
01-01-2021050258
30-12-2020050128
29-12-20204985149990
24-12-20204978750089
22-12-20204989750202
18-12-2020050297
16-12-20204937749616
14-12-20204883048955

Trading strategy

“Gold prices are expected to trade sideways to down in the near term over risk on sentiments. COMEX gold has important resistance at $1,852 per ounce and support at $1,810 per ounce. MCX Gold February futures support lies at Rs. 48,100 and resistance at Rs 49,200 for the day,”.

Global Bullion Market

Gold prices touched a near six-week low on Monday, extending losses from the previous session, as a stronger dollar and higher US Treasury yields pressured the non-yielding bullion.

Spot gold fell as much as 1.7 per cent to $1,816.53 per ounce, its lowest since Dec. 2, and was down 0.7 per cent at $1,835.96 by 0259 GMT. Prices fell as much as 4.4 per cent on Friday. US gold futures were flat at $1,835.60.

Silver fell 2.6 per cent to $24.71 an ounce, after dropping as much as 4.2 per cent earlier in the session. Platinum fell 2.7 per cent to $1,036.14, while palladium shed 0.6 per cent to $2,355.16.

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