Gold prices fell for the fourth consecutive day to Rs 42,017 per 10 gram in the Mumbai bullion market on rupee appreciation and profit booking. The yellow metal also came under pressure after brokers and exchange placed higher margin requirements that led to the unwinding of positions by traders causing prices to fall.
The rate of 10 gram 22-carat gold in Mumbai was Rs 38,488 plus 3 percent GST, while 24-carat 10 gram was Rs 42,017 plus GST. The 18-carat gold quoted at Rs 31,513 plus GST in the retail market.
"We expect buying to return to gold on account of a possible slowdown in the larger economies and stimulus measures by central banks and governments to infuse liquidity. Low-interest rates could support gold prices as financing costs will be lower, and the funds will move to the safe-haven assets," said Abhishek Bansal, CMD, Abans Group.
Gold prices fell on account of a rout in global equities, which have forced investors to fund margin calls. The European Central Bank approved new stimulus measures, and the US Federal Reserve offered $1.5 trillion in short-term loans to prevent a further sell-off.
According to Navneet Damani, Vice President, Motilal Oswal, Gold prices fell further 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.
A significant sell-off in equities would place further pressure on gold as investors would liquidate positions to meet margin calls. Panic has forced the market to liquidate and sit on cash hence giving support to the dollar. There is a lot of panic in the market and even safe-haven assets are getting ditched to cover losses in the wipeout.
The broader trend on Comex could be $1,570-1,610 and on the domestic front, prices could hover in the range of Rs 41,300-42,200, said Damani.
The gold/silver ratio that measures the amount of silver required to buy one ounce of gold stood at 97.52 to 1.
Silver prices declined Rs 2,255 to Rs 43,085 per kg from its closing on March 12.
In the futures market, gold rate touched an intraday high of Rs 42,070 and an intraday low of Rs 41,443 on MCX. For the April series, the yellow metal touched a low of Rs 37,530 and a high of Rs 44,961.
Gold futures for delivery in April slide Rs 479, or 1.13 percent on the MCX trading at Rs 41,727 per 10 gram in evening trade in a business turnover of 9,137 lots. Gold contracts for June delivery slipped Rs 573, or 1.34 percent, at Rs 42,250 per 10 gram in a business turnover of 14,268 lots.
The value of the April contract traded so far is Rs 3,822.32 crore and June contract saw the value of Rs 793.15 crore.
Similarly, Gold Mini contract for April eased Rs 484, or 1.15 percent at Rs 41,733 in a business turnover of 8,055 lots.
MCX Gold has intraday support at Rs 41,535-41,430 whereas resistance is placed at Rs 42,130-42,355 levels, according to Motilal Oswal.
The brokerage firm said spot gold has resistance at $1,610-1625 whereas support is at $1,565-1,550.
At 12:11 pm (GMT), spot gold gained $8.73 at $1,586.53 an ounce in London trading.
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