Gold price today: Yellow metal falls over 1% as margin calls mount on traders

India's April gold prices fell more than 1 percent on March 13, tracking weakness in international prices as a coronavirus driven rout in global equities forced investors to cover margin calls.

On the Multi Commodity Exchange (MCX), April gold contracts were trading lower by Rs 449, or 1.06 percent, at Rs 41,757 per 10 gram at 1030 hours.

Gold and silver were hammered a day earlier after global equities saw a meltdown worse than the one during the 2008 financial crisis. The virus that is spreading rapidly outside China, the country from where the outbreak began, triggered panic in international markets.

Bullion also witnessed heavy selling on March 12, with gold testing lows of $1,560 per troy ounce and silver $15.60 per troy ounce.

The volatility is likely to continue, as traders sell gold to make up for margin calls, say experts. The metal could trade in the range of Rs 41,100-43,000.

"Both the precious metals slipped despite ECB and FED announced QE programmes and global equities plunged again. It seems margin calling pressure also affect precious metals. Looking at the free fall in global equities, precious metals will be highly volatile today," Manoj Jain, Director, IndiaNivesh Commodities, told Moneycontrol.

"At MCX, gold is expected to be traded in the range of 41,100-43,000 and silver is expected to be traded in the range of 42800-45100 levels. Market will highly volatile due to weekend session and volatility in global financial markets," he said.

On the daily chart, gold traded weak on March 12, as it closed below 20-EMA for the first time in 2020. Prices fell further on March 13 and were on track to post their biggest weekly drop in nearly seven years, as a rout in global equities forced investors to cover margin calls.

Major moving averages--20, 50, 100-days EMA-- suggesting profit booking can continue, as markets try to cover margin globally following heavy weakness in equity markets.

The overall trend remains positive till the time Rs 39,500 holds on a closing basis but selling will be seen. For the day, Rs 41,600-41,875 will act as resistance and Rs 41,450-41,175 as supports.

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