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Higher yellow metal edges, nearly Rs 47,250;  Should we take a stand?

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Domestic gold and silver prices edged up Wednesday, following global benchmarks amid a weakening dollar. The depreciation of the greenback makes precious metals more attractive to holders of other currencies. Strong gains in the domestic stock market, with benchmarks hitting new highs, limited bullion’s rise.

At 1:50 p.m., the December MCX gold futures contract was at Rs 47,276.00 per 10 grams, up Rs 78 or 0.2% from its previous close. Money has also risen, with the December contract rising by Rs 444 or 0.7% to Rs 62,030 per kilogram.

Globally, gold and silver rose as investors waited for US inflation data to assess the US central bank’s trajectory on policy normalization.

Spot gold rose 0.4% to 1,768.1 an ounce. US gold futures rose 0.5% to $ 1,768.6 an ounce. Silver rose 1.3 percent to $ 22.9 an ounce.

The dollar index, which measures the greenback against six other currencies, fell 0.2% to 94.8, weakening a day after hitting a high for more than a year.

Returning home, the rupee gained 26 paise to 75.26 against the dollar, supported by strong macroeconomic data. Falling crude oil rates also supported the currency.

Gold is seen as a hedge against inflation and currency depreciation probably as a result of the widespread stimulus. The weakening of stimulus measures by the US central bank could tackle these two conditions, reducing the attractiveness of bullion.

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What analysts say

Manoj Kumar Jain, director of commodities and currency research at Prithvi Finmart, expects both precious metals to rise due to rising inflation.

He sees support for MCX gold at Rs 47,000-46,770 and resistance at Rs 47,440-47,650. For the money, he sees support at Rs 61,200-60,900 and resistance at Rs 61,900-62,400.

He recommends buying gold around Rs 47,050 for a target of Rs 47,440 with a stop loss at Rs 46,820, and silver around Rs 61,330 for a target of Rs 62,200 with a stop loss at Rs 60,900.

(Edited by : Sandeep Singh)

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