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Informist, Friday, Aug 23, 2024

By Sandeep Sinha

MUMBAI – Tracking contracts on the COMEX, futures contracts of gold were trading higher today on the Multi Commodity Exchange of India because of short-covering by traders after a sell-off on Thursday. The positive sentiment was further aided by inflows in exchange-traded funds.

On Thursday, gold holdings with SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose by 1.15 tn to 857.85 tn. The fund has a market value of $68.47 bln.

"The upward momentum (in gold) is attributed to expectations of interest rate cuts, signs of an economic slowdown in China, and a weakening dollar index, which has declined from 104 to below 101.50. The depreciation of the dollar has been influenced by other currencies performing well against the dollar, further supporting gold prices," Jateen Trivedi, vice-president and research analyst at LKP Securities, said in an email note. "These factors combined have bolstered investor confidence in gold as a safe-haven asset, sustaining its positive trend," Trivedi said.

The dollar index, which measures the strength of the greenback against a basket of six major currencies, fell to a fresh 52-week low of 100.82, down 0.7% on a dovish speech from US Federal Reserve Chief Jerome Powell. A weak dollar makes commodities priced in the greenback attractive for holders of other currencies, boosting demand for precious metals.

"With an appropriate dialing back of policy restraint, there is good reason to think that the economy will get back to 2% inflation while maintaining a strong labor market. The current level of our policy rate gives us ample room to respond to any risks we may face, including the risk of unwelcome further weakening in labor market conditions," Powell said at the Jackson Hole Symposium today.

At 1915 IST, the most-active October gold contract on the MCX was up 0.4% at 71,460 rupees per 10 gm. The October contract on the COMEX was up 0.6% at $2,508.70 per oz. The highest call open interest was at the 74,000-rupee strike, suggesting a bullish view, while the highest put open interest at the 68,000-rupee strike for the Sep 24 gold contract.

SILVER prices rose taking firm cues from the COMEX and positive trend in gold and industrial metals. At 1920 IST, the most-active September contract of silver on the MCX was up 0.3% at 84,000 rupees per kg. The same-month contract on the COMEX was 0.7% higher at $29.24 per oz.

The MCX Bulldex, an index that tracks the real-time performance of gold and silver futures on the MCX, was up 97 points at 17920 points. As at 1920 IST, the October and December contracts of gold recorded turnovers of 23.22 bln rupees and 2.39 bln rupees, respectively, on the MCX. At the same time, the September and December contracts of silver saw turnovers of 17.75 bln rupees and 8.04 bln rupees, respectively.

The spot gold-silver ratio, also known as the Mint ratio, was higher at 85.45, which indicates that gold has outperformed silver. The ratio measures the ounces of silver required to buy an ounce of gold. The ratio was 84.51 on Thursday.

Outlook for the rest of the session:

--MCX gold seen at 70,900–71,950 rupees per 10 gm

--COMEX gold seen at $2,490–$2,525 an oz

--MCX silver seen at 83,350-85,800 rupees per kg

--COMEX silver seen at $29.15-$29.50 an oz

End

US$1 = 83.89 rupees

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

Edited by Ashish Shirke

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