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Informist, Monday, Jul 29, 2024

By Sandeep Sinha

MUMBAI – Futures contracts of gold on the Multi Commodity Exchange of India rose, taking cues from COMEX, as escalating geopolitical tensions in West Asia boosted the metal’s safe-haven appeal. The positive sentiment in yellow metal was also aided by increasing bets on the US Federal Reserve cutting interest rates. Lower interest rates boost the appeal of non-interest-bearing assets such as gold.

"Gold is expected to range trade with a slight positive bias, though it is bearish in the near term on weak Chinese demand, uncertainty over multiple rate cuts and mixed US data" Praveen Singh, associate vice president, fundamental currencies and commodities at Sharekhan by BNP Paribas said in an email note.

However, the upside in bullion was capped by the strength of the dollar, which makes commodities priced in the greenback expensive for those holding other currencies. The dollar index, which measures the strength of the greenback against a basket of major currencies, was up 0.3% at 104.61.

At 1845 IST, the most active August gold contract on the MCX was up 0.7% at 68,651 rupees per 10 gm. The same-month contract on COMEX was up 0.5% at $2,392.50 per oz.

On the options front, the highest call open interest for gold is at 70000-72000 strike, which suggests a bullish view, while on the downside, the highest put open interest is at 71,000-70,000 strike for the Sep 24 gold contract on the MCX. Many sellers were stuck at higher levels and unable to find an exit after Finance Minister Nirmala Sitharaman unexpectedly announced a sharp cut in import duty in the Budget last week.

"The undertone is sideways to neutral and some short-covering from last week’s sell-off is a possibility. On the higher side, 69,600-70,600 rupees is a firm resistance zone, and we need a clear break above the zone for further upside," Reliance Securities said in a note.

On Friday, gold holdings with the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell by 2.02 tn to 843.17 tn. The fund has a market value of $64.67 bln.

SILVER prices rose, taking firm cues from COMEX and the firm trend in gold. At 2010 IST, the most active September contract for silver on the MCX was up 0.7% at 81,950 rupees per kg. The same-month contract on COMEX rose 0.4% at $28.14 per oz.

The MCX Bulldex, an index that tracks the real-time performance of gold and silver futures on the MCX, was up 89 points at 17372 points. As of 1900 IST, the August and October contracts of gold recorded turnovers of 30.06 bln rupees and 31.55 bln rupees, respectively, on the MCX. The September and December contracts of silver saw turnovers of 20.43 bln rupees and 1.71 bln rupees, respectively.

The spot gold-silver ratio, also known as the Mint ratio, rose to 85.54, which indicates that gold outperformed silver. The ratio measures the ounces of silver required to buy an ounce of gold. The ratio was 85.46 on Friday.

Outlook for the rest of the session:

--MCX gold seen at 68,005–69,090 rupees per 10 gm

--COMEX gold seen at $2,380–$2,410 an oz

--MCX silver seen at 81,350-82,830 rupees per kg

--COMEX silver seen at $27.95-$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 Saji George Titus

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