Domestic gold prices barely moved on Thursday tracking rangebound movement in the global benchmark amid a strengthening dollar, making the yellow metal more expensive for holders of other currencies. Sharp gains in Indian equities also boosted investors' appetite for risk, denting the appeal of precious metals as a safety net.
At 12:45 pm, the December contract of gold futures on MCX quoted at Rs 46,914 per 10 grams, up Rs 7 compared to its previous close. Silver rose, with the December futures up 0.7 percent at Rs 61,399 per kilogram.
Globally, gold recovered initial losses to edge higher but gains were limited as the dollar held firm. Investors were cautious ahead of US jobs data due on Friday expected to provide more clarity on the Federal Reserve’s stance on tapering of stimulus and on interest rates.
Spot gold was up 0.2 percent at $1,766.4 per ounce. US gold futures were up 0.3 percent at $1,767.1 per ounce. Silver was up 0.4 percent at $22.7 per ounce.
The US dollar held close to a one-year high, buoyed by inflation concerns and expectations that the US central bank would have to act sooner to normalise policy.
The dollar index - which measures the greenback against six currencies - was flat. A stronger dollar makes gold less appealing for those holding other currencies.
Gold is often considered a hedge against higher inflation, but a Fed rate hike would increase the opportunity cost of holding gold, which pays no interest.
Back home, the rupee appreciated by 22 paise to 74.76 against the dollar.
On Dalal Street, benchmark indices surged amid across-the-board buying amid strength in global markets. Financial, auto, realty, IT and consumer durable shares were in high demand. Catch LIVE Updates here
What analysts say
Manoj Kumar Jain, Director, Head-Commodity and Currency Research at Prithvi Finmart, expects bullion prices to be volatile on Thursday. Gold has support at $1,752-1,740 per troy ounce and resistance at $1,774-1,788 per ounce, he said.
He sees support for MCX gold futures at Rs 46,660-46,500 and resistance at Rs 47,155-47,330. For silver, he pegs support for silver at Rs 60,600-60,330 and resistance at Rs 61,400-61,900.
Sandeep Matta, Founder of TRADEIT Investment Advisor, said gold has started to show strength despite the odds. "Market participants are betting positively on the unknown as payroll data will influence and shape the Federal Reserve’s current plan to begin tapering," he said.
He sees Rs 46,918 as a key level for the near-month futures contract.
Should you take positions?
Jain suggests buying gold on dips to around Rs 46,700 for a target of Rs 47,155 with a stop loss at Rs 46,500. He recommends buying silver futures around Rs 60,700 for a target of Rs 61,500 with a stop loss at Rs 60,330.