Gold prices tumble during the week, silver sees a mixed trend

Union finance minister Nirmala Sitharaman on Monday announced a cut in customs duty on gold and silver to 7.5% from 12.5%.

Gold prices continued to see a bad run throughout the week as the government announced cut in import duty on the yellow metal as well as silver. Union finance minister Nirmala Sitharaman on Monday announced a cut in customs duty on gold and silver to 7.5% from 12.5%, in a move which will help lower the prices of the precious metals in the domestic market and boost exports of gems and jewellery.

"Gold and silver presently attract a basic customs duty of 12.5 per cent. Since the duty was raised from 10 per cent in July 2019, prices of precious metals have risen sharply. To bring it closer to previous levels, we are rationalising customs duty on gold and silver," Sitharaman had said while presenting the Union Budget 2021-22 on Monday.

On Monday, gold tumbled ₹1,324 to ₹47,520 per 10 gram in Delhi. In the previous trade, the precious metal had closed at ₹48,844 per 10 gram. However, silver jumped ₹3,461 to ₹72,470 per kilogram from ₹69,009 per kilogram in the previous trade.

Gold was trading in the green at $1,871 per ounce in the international market and silver also quoted with gains at $29.88 per ounce.

Gold declined by ₹480 to ₹47,702 per 10 gram on Tuesday in the national capital in-line with fall in global precious metal prices, according to HDFC Securities. In the previous trade, the metal had closed at ₹48,182 per 10 gram.

Gold in the national capital on Wednesday again declined by ₹232 to ₹47,387 per 10 gram amid the decline in global precious metal prices, PTI reported citing acHDFC Securities. In the previous trade, the precious metal had closed at ₹47,619 per 10 gram.

On Thursday, gold recorded a fall for the fourth consecutive day and declined ₹322 to ₹47,135 per 10 gram in line with a drop in global precious metal prices and rupee appreciation, HDFC Securities said according to PTI. It had closed at ₹47,457 per 10 gram in the previous trade. Silver also declined ₹972 to ₹67,170 per kg, from ₹68,142 per kg in the previous trade.

Gold fell again on Friday as it declined ₹163 to ₹46,738 per 10 gram in the national capital amid rupee appreciation, PTI cited HDFC Securities. Gold had closed at ₹46,901 per 10 gram in the previous trade. On the other hand, silver gained ₹530 to ₹67,483 per kg, from ₹66,953 per kg in the previous trade.

On Saturday (February 6), the price of 22-carat gold in Delhi was ₹46,200 and it stood at ₹44,690 in Chennai.

Gold Price Today (February 7): Short-term outlook, Forecast and Updates
Indian Major Cities Gold Rates Today. Photo: Goodreturns

Gold Price Analysis: XAU/USD gains following soft US jobs report

Spot gold prices (XAU/USD) have been on the front foot in recent trade on the back of a downbeat US labour market report for January, aided by softness in the US dollar; perhaps traders suspect that a soft start to the year for the labour market will encourage US monetary policymakers to keep their foot on the gas with regards to easy financial conditions for longer, an environment that might benefit gold (especially if real yields fall even lower and inflation expectations move higher), according to Fxstreet.

Right now, gold is trading in the $1810s, having managed to reclaim the big figure during the European morning and then find further upside in wake of the data. Prices are up around 1% or just under $20 on the day. On the week, however, things have not been great; XAU/USD is set to close out the week with losses of around 2% or $35, having started Monday’s Asia Pacific session just under the $1850 mark. Soft US jobs data appears to have been a saving grace for gold; a strong number likely would have seen the precious metal test November lows in the $1760s.

Looking ahead for the precious metal, traders ought to continue watching events in FX, equity and bond markets; for most of the week, USD, stocks and bond yields all rallied in tandem, a bearish combination for gold. Should this continue into next week, Friday’s rebound could turn into nothing more than a dead cat bounce. US Consumer Price Inflation numbers for January and a speech from Fed Chair Jerome Powell next week will be the main calendar events to keep an eye on.

Downbeat US jobs report

In an immediate reaction to Friday’s US labour market report, spot silver saw a strength, though much of this was quickly pared back. As a recap; the US economy added 49K jobs in January, almost bang on consensus expectations according to Reuters, but a little below consensus according to Bloomberg. Somewhat disappointingly, however, most of these jobs added were in government employment (up 43K), not in the private sector (+6K). Surprisingly, the unemployment rate dropped to 6.3% from 6.7%, but this was in part driven by a drop in the participation rate to 61.4% from 61.5%. The U6 underemployment rate was 11.1%, down from 11.7%.

Meanwhile, Average Hourly Earnings continue to grow at a historically elevated pace, though these numbers are distorted by the disproportionately high level of job losses in lower-paying sectors of the economy (like hospitality and leisure) that have been more heavily impacted by the pandemic and lockdowns. All in all, not a great report, hence the minor strength seen in safe-haven precious metals markets; weaker data is better silver if 1) it takes some steam out of US dollar strength (which it appears to have done on Friday) and 2) it helps keep Fed policy ultra-accommodative for longer.

In terms of the big picture; does Friday’s labour market report change the outlook for US fiscal or monetary policy? Not really. A soft report will keep some pressure on Congress to act, which is arguably a positive for risk appetite. But they would be delivering more stimulus regardless. The Fed, meanwhile, are still a long way off from thinking about tightening.

Price of Gold Fundamental Daily Forecast – Holding onto Earlier Gains Following Disappointing Jobs Report

U.S. government debt prices rose on Friday morning as the monthly jobs report showed that the unemployment rate ticked down in January, said Fxempire.

Gold futures are trading higher on Friday, holding on to earlier gains, following the release of the disappointing U.S. Non-Farm Payrolls report. Helping to underpin prices are mixed U.S. Treasury yields and a sharp break in the U.S. Dollar. Traders are also reacting positively to the news from Washington regarding President Joe Biden’sstimulus package.

Despite Friday’s jump in prices, gold was set for its worst weekly dip in four as investors continued to bank on the greenback with U.S. Treasury yields also gaining. Since the start of the new year, gold’s status as a hedge against inflation from widespread stimulus has been challenged by higher yields because they increase the opportunity cost of holding non-yielding bullion.

US Treasury Yields Rise as Unemployment Rate Dips

U.S. government debt prices rose on Friday morning as the monthly jobs report showed that the unemployment rate ticked down in January. Since yields move inversely to prices, this meant that Treasury yields fell. Lower yields tend to support gold prices.

The headline unemployment rate declined to 6.3% from 6.7% in January, according to the Labor Department, but some of the underlying numbers were less encouraging. The economy added 49,000 jobs, slightly missing estimates, and a revision to the December report showed a larger loss of jobs than previously reported.

Biden Administration Pushes Ahead with Stimulus Plans

President Joe Biden’s administration is pushing ahead with plans to pass a $1.9 trillion economic relief plan, seeking to prop up the U.S. economy as it grapples with the ongoing COVID pandemic.

The stimulus plan has prompted disagreement with Republican lawmakers over state and local funding and other provisions. However, it is thought the relief plan, known as the American Rescue Package, could still pass with bipartisan support even if Democrats use a process that requires only a simple majority of senators.

China Gets Holiday Boost, Indian Gold Buyers Cheer Price Dip

Physical gold demand picked up in China this week ahead of the Lunar New Year festival, while Indian retail buyers cheered a sharp dip in domestic rates, according to Reuters. Singapore dealers, meanwhile, flagged a possible supply crunch fueled by a surge in interest for silver.

Demand is “a little better due to the Lunar new year,” said Ronald Leung, chief dealer for Lee Cheong Gold Dealers in Hong Kong, adding premiums could rise further if prices remain low following the holiday.

In India, a dip in prices to a near eight-month trough drew buyers in.

Daily Forecast

April gold is rebounding following a test of a long-term 50% level at $1787.30 on Thursday. Investors have shown little reaction to the news today, but the break into the support zone seems to have woken up investors looking for value.

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