Benchmark December gold on COMEX--a division of New York Mercantile Exchange--traded closer to $890 an ounce Thursday after posting its biggest one-day rise in nearly 26 years on Wednesday. October futures on MCX is trading past Rs 13,000 per 10 gm.
Silver futures have also rallied by more than 19 per cent since previous close, trading well above Rs 19,500 per kg. COMEX December silver has managed to gain nearly $2 per ounce in last two sessions.
Prices were expected to remain on the higher side owing to the turbulence in financial markets. According to Praveen Singh, research analyst, Sharekhan Commodities, “After the Federal Reserve rescued troubled insurance giant AIG, the market seems to have stabilized for more leveraged positions to build up. This is drawing investors to look at safe bets like gold and silver to put their money into.”
“We would be looking at a range of Rs 12,750-13,800 for MCX Gold October contract to give good buying opportunity to traders. The wide range of rupee exchange rate adds to chances of this range to hold for the short-term. Silver prices on the other hand could look at Rs 21,000-21,500 on the upside, while Rs 17,500 is expected to be the downside support for MCX December contract,” said Harish Gallipeli, head of research, Karvy Comtrade.
A pullback in crude oil prices after the weekly inventory data showed a more than expected decline also helped the yellow metal to extend its gains. US crude oil stockpiles fell by 6.33 million barrels, a fourth consecutive decline. However, $100 a barrel mark is seen as a crucial resistance for the November contract on NYMEX.
Traders are looking towards $900-910 range in gold prices as the upside resistance which also coincide with the 200-day moving average of the prices. “ Besides the demand from big players in a scenario when other asset classes are being outperformed by gold, retail investors generally look towards the precious metal in uncertain time periods,” said Galipelli.
According to him, fears that other global banking institutions could also be in line to announce their losses or, even worse, their liquidity problems, are helping investors to look at precious metals as an assurance against ambiguous markets.
However, the rally of nearly $100 in gold is the result of short (sell) stop losses above $800 getting triggered and adding to an upward pressure on prices.
According to Kishore Narne, research head, Anand Rathi Commodities, “Even as prices continue to trade in a wide range for coming weeks, a retracement towards $830 on lower side cannot be ruled out after this huge amount of rise in two sessions.”
Most domestic traders are believed to have been on the buy side due to the developments from start of the week. Recent drop in prices of gold and silver to Rs 11,200 and Rs 18,000, respectively, was seen as a good opportunity for building up buy positions.
According to Kishore Narne, research head, Anand Rathi Commodities, “Even as prices continue to trade in a wide range for coming weeks, a retracement towards $830 on lower side cannot be ruled out after this huge amount of rise in two sessions.”
Most domestic traders are believed to have been on the buy side due to the developments from start of the week. Recent drop in prices of gold and silver to Rs 11,200 and Rs 18,000, respectively, was seen as a good opportunity for building up buy positions.
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