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Informist, Friday, Aug 2, 2024

By Sandeep Sinha

MUMBAI – Futures contracts of gold rose on the Multi Commodity Exchange of India and COMEX today because of a weak dollar, which makes commodities priced in the greenback cheaper for holders of other currencies. At 1720 IST, the dollar index, which measures the strength of the greenback against a basket of major currencies, was down 0.3% at 104.06.

The positive sentiment was also buoyed by a safe-haven appeal due to the escalation of tension in West Asia and hopes of multiple interest rate cuts by US Federal Reserves this year. The expectation of lower interest rates increases the appeal of non-yielding assets such as gold.

"The rise is driven by renewed fears of a US recession following higher jobless claims and escalating tensions in West Asia, fuelling safe-haven buying. Investors are now focused on the upcoming non-farm payrolls and unemployment data, which will provide clarity on the likelihood of a September rate cut by the Federal Reserve. The broad trend for gold remains positive," Jateen Trivedi, vice president and research analyst at LKP Securities, said in a note.

Analysts polled by Dow Jones estimated payrolls at 185,000 in July from 206,000 in June.

At 1725 IST, the most active October gold contract on the MCX was up 0.8% at 70,497 rupees per 10 gm. The August-month contract on the COMEX was up 1% at $2,458.80 per oz. On the options front, the highest call open interest for gold is at 70,000-74,000 strike, which suggests a bullish view, while on the downside, the highest put open interest is at 70,000-69,000-strike for the Sep 24 gold contract.

On Thursday, gold holdings with the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell by 0.58 tn to 845.47 tn. The fund has a market value of $66.70 bln.

SILVER prices rose, taking firm cues from the COMEX, and firm trends in gold and industrial metals. At 1730 IST, the most active September contract for silver on the MCX was up 1.6% at 83,872 rupees per kg. The same-month contract on the COMEX was up 1.9% at $29.01 per oz.

The MCX Bulldex, an index that tracks the real-time performance of gold and silver futures on the MCX, was up 156 points at 17760 points. As of 1730 IST, the October and December contracts of gold recorded turnovers of 20.45 bln rupees and 1.28 bln rupees, respectively, on the MCX. The September and December contracts of silver saw turnovers of 18.70 bln rupees and 1.92 bln rupees, respectively.

The spot gold-silver ratio, also known as the Mint ratio, rose to 85.06, which indicates that gold outperformed silver. The ratio measures the ounces of silver required to buy an ounce of gold. The ratio was 84.31 on Thursday.

Outlook for the rest of the session:

--MCX gold seen at 70,150–71,000 rupees per 10 gm

--COMEX gold seen at $2,435–$2,485 an oz

--MCX silver seen at 82,700-85,100 rupees per kg

--COMEX silver seen at $28.85-$29.25 an oz

End

US$1 = 83.75 rupees

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

Edited by Saji George Titus

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