MCX gold futures for June 4 delivery rose Rs 273, or 0.58 percent, to trade at Rs 47,010 per 10 grams at last count, up to Rs 47 197 earlier in the day.
The contract value for the 5 August delivery was Rs 47,312, up Rs 261 or 0.55%.
Silver MCX (May 5) followed suit, climbing Rs 736 or 1.09% to Rs 68,260. The contract dated July 5 was quoted at Rs 69,101, up Rs 735, or 1.08 percent, from the previous close.
“Rising inflation and personal incomes have supported gold prices at a lower level … Gold could hold a critical support level of $ 1,750 an ounce at the close.”
Globally, spot gold last traded near its highest level of the day at $ 1,782.65 an ounce, up $ 13.68 or 0.77 percent. Silver rose 1.19% to $ 26.23 an ounce.
According to the Mumbai-based industry agency IBJA, spot gold with a purity of 99.9% is priced at Rs 46,960 per 10 grams at home, and silver at Rs 68,297 per kilogram excluding VAT.
Analysts say that while a weakening dollar overseas supported Comex prices, weakness on Dalal Street and the appreciation of the rupee made the yellow metal more attractive.
The $ 30 S&P BSE Sensex ended a highly volatile session down 63.84 points to 48,718.52, the second negative close in a row, although it recovered 690.45 points from its lowest level of the day.
As a rule, precious metals have a feedback loop with stocks, with any gain in stocks increasing the risk appetite of investors, taking them away from safe havens such as gold, and vice versa.
The rupee retraced its initial losses and ended up rising 14 paise to 73.95 against the US dollar. The dollar fell after a recent jump as investors cautiously kicked off a week filled with central bank meetings and important US economic data.
The dollar index, which measures the strength of the US currency against six major foreign peers, last fell 0.19% to 91.09 after falling to 91.07 earlier Monday.
The weakness of the dollar makes the yellow metal cheaper for those who trade other currencies.
What analysts say
“Where, on the one hand, the head of the Fed has consistently downplayed inflation, on the other, US Treasury Secretary Janet Yellen allayed fears that President Biden’s plans for infrastructure, jobs and families would fuel inflation by stating that spending would be phased out in for a decade, “said Navnit Damani, vice president of commodity research, Motilal Oswal Financial Services.
He expects the COMEX gold price to fluctuate in a wider range in the near future – $ 1,758-1,800 per ounce (Rs 46,760-47,220 per 10 grams on MCX).
Gold and silver are expected to remain volatile this week amid volatility in the dollar index and bond yields, said Manoj Kumar Jain, chief commodity research director at Prithvi Finmart.
“MCX gold finds support at Rs 46,550–46,330 and resistance at Rs 46,920–47,100 and silver at Rs 67,900–67,500 and 68,800–69,400 rupees, respectively,” said Jane, who suggests buy the yellow metal at about Rs 46,550 to reach the target. Rs 47,000 with stop loss at Rs 46,300.
Market participants will be closely watching manufacturing and services PMI data from major economies due this week.
Analysts say gold is poised for higher levels in the medium term amid uncertainty over the rapidly spreading coronavirus pandemic.