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Informist, Friday, Jul 26, 2024

By Sandeep Sinha

MUMBAI – Futures contracts of gold on the Multi Commodity Exchange of India rose, taking cues from COMEX, due to short-covering after a sharp fall Thursday. The positive sentiment in the yellow metal was boosted by an inflow in gold exchange-traded funds and a weaker dollar ahead of US personal consumption expenditures data later today.

The dollar index, which measures the strength of the greenback against a basket of six major currencies, was down 0.1% at 104.80. A weak dollar makes commodities priced in the greenback attractive for holders of other currencies, boosting demand.

Thursday, GOLD holdings with the SPDR Gold Trust, the world's largest gold-backed ETF, rose by 3.45 tn to 845.19 tn. The fund has a market value of $64.22 bln.

The yellow metal is on track for the biggest weekly decline in the domestic market since March 2020 after the government cut import duty on gold to 6% from 15% in the Budget presented earlier this week. So far this week, gold has fallen 6,019 rupees per 10 gm, or 8.2%, on the MCX. Gold prices tumbled over 8.6% in the first week of March 2020.

At 1545 IST, the most active August gold contract on the MCX was up 0.5% at 67,795 rupees per 10 gm. The same-month contract on COMEX was up 0.8% at $2,372.40 per oz.

Investors will take further cues from the US Core Personal Consumption Expenditures Price Index, the preferred inflation gauge of the US Federal Reserve, due later today. They will also watch out for the US Federal Open Market Committee's interest rate decision and the Bank of Japan's policy decision next week for further cues.

SILVER prices were up slightly despite weak cues from COMEX, because of short-covering. At 1545 IST, the most active September contract for silver on the MCX was up 0.1% at 81,400 rupees per kg. The same-month contract on COMEX was down 0.2% at $27.93 per oz.

The MCX Bulldex, an index that tracks the real-time performance of gold and silver futures on the MCX, was up 69 points at 17226 points. As of 1545 IST, the August and October contracts of gold recorded turnovers of 21.10 bln rupees and 14.47 bln rupees, respectively, on the MCX. The September and December contracts of silver saw turnovers of 14.90 bln rupees and 1.43 bln rupees, respectively.

The spot gold-silver ratio, also known as the Mint ratio, rose to 85.43, which indicates that gold outperformed silver. The ratio measures the ounces of silver required to buy an ounce of gold. The ratio was 85.08 on Thursday.

Outlook for the rest of the session:

--MCX gold seen at 67,000–68,200 rupees per 10 gm

--COMEX gold seen at $2,350–$2,405 an oz

--MCX silver seen at 79,800-82,750 rupees per kg

--COMEX silver seen at $27.70-$28.35 an oz

End

US$1 = 83.73 rupees

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Rajeev Pai

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