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Informist, Tuesday, Aug 20, 2024

--COMEX Oct gold contract hits lifetime high of $2,546.8/oz 

By Sandeep Sinha

MUMBAI – Futures contracts of gold were trading higher today on the Multi Commodity Exchange of India, tracking those on the COMEX, because of fresh inflows in exchange-traded funds. The positive sentiment was also bolstered by geopolitical tensions in West Asia, particularly from the Israel-Iran-Hamas conflict, which is increasing the safe-haven appeal for the precious metal.

Precious metals also benefitted from expectations of a Federal Reserve interest rate cut as soon as September and a weaker dollar, which makes commodities priced in the greenback attractive for holders of other currencies, boosting demand for precious metals.

On Monday, gold holdings with SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose by 4.03 tn to 859.0 tn, the highest since Jan 19. The fund has seen an inflow of 13.24 tn in the past three days. The fund has a market value of $68.32 bln.

At 1920 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was down 0.2% at 101.64. According to the CME FedWatch tool, markets are now pricing 73.5% chance of the Fed cutting interest rates by 25 basis points in its September meeting and over 57% expect the possibility of another 25-basis-point cut at the November meeting.

"We expect the Fed to cut interest rates three times this year and three times more at the beginning of next year. The US key interest rate is, therefore, likely to fall by a total of 150 basis points by the second quarter of 2025," Carsten Fritsch, commodity analyst at Commerzbank said in a note to clients.

At 1920 IST, the most active October GOLD contract on the MCX was up 0.9% at 72,192 rupees per 10 gm. The same-month contract on COMEX was 0.9% higher at $2,541.6 per ounce, after touching a new lifetime high of $2,546.8 per oz earlier in the day. 

The highest call open interest for gold was at 70,000-74,000 rupees strikes, suggesting a bullish view, while the highest put open interest is at 70,000-68,000 rupees strikes for the Sep 24 gold contract.

SILVER prices rose, taking firm cues from the COMEX, and positive trends in gold and industrial metals. At 1925 IST, the most active September contract for silver on the MCX was up 1.4% at 85,552 rupees per kg. The same-month contract on the COMEX was 2% higher at $29.88 per oz.

The MCX Bulldex, an index that tracks the real-time performance of gold and silver futures on the MCX, was up 121 points at 18087 points. As of 1925 IST, the October and December contracts of gold recorded turnovers of 38.88 bln rupees and 4.11 bln rupees, respectively, on the MCX. The September and December contracts of silver saw turnovers of 30.78 bln rupees and 11.83 bln rupees, respectively.

The spot gold-silver ratio, also known as the Mint ratio, fell to 84.79, which indicates that gold underperformed silver. The ratio measures the ounces of silver required to buy an ounce of gold. The ratio was 85.77 on Monday.

Outlook for the rest of the session:

--MCX gold seen at 71,850–72,550 rupees per 10 gm

--COMEX gold seen at $2,525–$2,550 an oz

--MCX silver seen at 83,900-86,900 rupees per kg

--COMEX silver seen at $29.65-$30.10 an oz

End

US$1 = 83.79 rupees

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

Edited by Deepshikha Bhardwaj

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