India Bullion
Gold dn on yen strength, slowdown in Chinese economy
This story was originally published at 20:04 IST on 25 July 2024
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By Sandeep Sinha
MUMBAI – Futures contracts of gold were down on the Multi Commodity Exchange of India today, tracking the weakness on the COMEX, due to strength in the yen against the dollar and a slowdown in the Chinese economy. Investors squared off positions and turned cautious ahead of key US economic data, which also hurt the sentiments.
At 1815 IST, the most active August gold contract on the MCX was down 1.8% at 67,735 rupees per 10 gm. The same-month contract on COMEX was down 2% at $2,367.0 per oz.
The Japanese yen strengthened for the fourth successive session on rising expectations that the Bank of Japan will raise interest rates at its meeting next week. This led to significant unwinding of carry trades, resulting in a major sell-off in bullion.
"As market volatility increases and global economic uncertainties persist, bullion prices are likely to remain under pressure. Prices slumped in the early morning trading session as soon as China announced a series of rate cuts," Riya Singh, currency and commodities analyst at Emkay Global said in a note.
China is the largest consumer of gold, and any sign of reduced economic activity in China directly translates to lower demand for gold, Singh said.
Investors will take further cues from the US core personal consumer price index, the Federal Reserve’s preferred inflation gauge, due on Friday.
On Wednesday, gold holdings with the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, remained steady at 841.74 tn. The fund has a market value of $65.51 bln.
SILVER prices tumbled tracking weak cues from COMEX and weakness in gold and industrial metals. At 1815 IST, the most active September contract for silver on the MCX was down 4.8% at 80,834 rupees per kg. The same-month contract on COMEX plunged 5.5% at $27.70 per oz.
The MCX Bulldex, an index that tracks the real-time performance of gold and silver futures on the MCX, was down 409 points at 17201 points. As of 1815 IST, the August and October contracts of gold recorded turnovers of 49.99 bln rupees and 30.23 bln rupees, respectively, on the MCX. The September and December contracts of silver saw turnovers of 57.49 bln rupees and 4.67 bln rupees, respectively.
The spot gold-silver ratio, also known as the Mint ratio, rose to 86.01, which indicates that gold outperformed silver. The ratio measures the ounces of silver required to buy an ounce of gold. The ratio was 82.33 on Wednesday.
Outlook for the rest of the session:
--MCX gold seen at 67,400–68,300 rupees per 10 gm
--COMEX gold seen at $2,350–$2,400 an oz
--MCX silver seen at 80,400-82,300 rupees per kg
--COMEX silver seen at $27.65-$28.10 an oz
End
US$1 = 83.70 rupees
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Saji George Titus
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