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Informist, Monday, Aug 5, 2024

By Sandeep Sinha

MUMBAI – Futures contracts of gold fell on the Multi Commodity Exchange of India and COMEX today because of profit-taking. Traders were also forced to liquidate their gold positions to provide margin calls on other asset classes due to the rout in the global equity markets.

The Japanese yen strengthened for the fifth consecutive session after the Bank of Japan raised interest rates on Aug 2. The Japanese currency has risen nearly 12% from the lows of 161.952 touched on Jul 3, which led to significant unwinding of carry trades, resulting in a sell-off in bullion metals.

At 1920 IST, the most active October gold contract on the MCX was down 1% at 69,121 rupees per 10 gm. The August contract on the COMEX was down 1.3% at $2,393.20 per oz. The highest call open interest for gold was at 70,000-74,000 strike, suggesting a bullish view, while the highest put open interest is at 69,000-68,000-strike for the Sep 24 gold contract.

"On hourly timeframe, MCX gold price has changed character from uptrend to downtrend on the chart. We can expect a lower level from this corrective wave and the Relative Strength Index is also below 50, hence the outlook for the evening session is bearish," Reliance Securities said in a note.

On Friday, gold holdings with the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, remained steady at 845.47 tn. The fund has a market value of $67.11 bln.

SILVER prices tumbled, taking firm cues from the COMEX, and weak trends in gold and industrial metals. At 1925 IST, the most active September contract for silver on the MCX was down 3.3% at 79,738 rupees per kg. The same-month contract on the COMEX was 4.2% lower at $27.19 per oz.

The MCX Bulldex, an index that tracks the real-time performance of gold and silver futures on the MCX, was down 292 points at 17226 points. As of 1925 IST, the October and December contracts of gold recorded turnovers of 76.53 bln rupees and 6.04 bln rupees, respectively, on the MCX. The September and December contracts of silver saw turnovers of 75.88 bln rupees and 12.52 bln rupees, respectively.

The spot gold-silver ratio, also known as the Mint ratio, rose to 88.24, which indicates that gold outperformed silver. The ratio measures the ounces of silver required to buy an ounce of gold. The ratio was 85.51 on Friday.

Outlook for the rest of the session:

--MCX gold seen at 68,270–71,200 rupees per 10 gm

--COMEX gold seen at $2,380–$2,420 an oz

--MCX silver seen at 77,750-82,250 rupees per kg

--COMEX silver seen at $27.00-$27.50 an oz

End

US$1 = 83.85 rupees

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

Edited by Saji George Titus

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