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Informist, Monday, Aug 26, 2024

By Sandeep Sinha

MUMBAI – Futures contracts of gold on the Multi Commodity Exchange of India rose, taking cues from the COMEX, because of rising geopolitical tensions in West Asia after Israel launched a pre-emptive strike on Hezbollah over the weekend. The sentiment was further supported by dovish comments from Federal Reserve Chairman Jerome Powell at the Jackson Hole Symposium on Friday.

Powell in his keynote speech at the central bankers' conference in Jackson Hole on Friday said the "time has come" to cut interest rate. "The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks," Powell said.

"Gold rally follows Jerome Powell's dovish speech, reinforcing expectations of interest rate cuts starting in September 2024. Markets are pricing in cuts of at least 75 basis points by year-end. However, the precise magnitude, pace, and frequency of these rate cuts will depend on future economic data, particularly inflation, employment figures, and other key economic indicators," Jateen Trivedi, vice-president and research analyst at LKP Securities, said in an email note. "As a result, global markets are actively pricing in these potential cuts, and gold, being a non-yielding asset, stands to benefit from the lower interest rate environment," he said.

At 1550 IST, the most active October gold contract on the MCX was up 0.6% at 72,192 rupees per 10 gm. The same-month contract on the COMEX was 0.6% higher at $2,538.50 per oz. The highest call open interest for gold was at the 74,000-rupee strike, suggesting a bullish view, while the highest put open interest was at the 68,000-rupee strike for the Sep 24 gold contract.

On Friday, gold holdings with SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 1.73 tn to 856.12 tn. The fund has a market value of $69.10 bln.

Investors await US GDP, consumer confidence, durable goods orders, and personal consumption expenditure data later in the week.

SILVER prices rose, taking cues from the COMEX and positive trends in gold and base metals. At 1600 IST, the most active September contract for silver on the MCX was up 1.1% at 86,104 rupees per kg. The same-month contract on the COMEX was 1.2% higher at $30.63 per oz.

The MCX Bulldex, an index that tracks the real-time performance of gold and silver futures on the MCX, was up 119 points at 18150 points. As of 1600 IST, the October and December contracts of gold recorded turnovers of 19.09 bln rupees and 2.55 bln rupees, respectively, on the MCX. The September and December contracts of silver saw turnovers of 17.22 bln rupees and 10.58 bln rupees, respectively.

The spot gold-silver ratio, also known as the Mint ratio, fell to 83.76, which indicates that gold outperformed silver. The ratio measures the ounces of silver required to buy an ounce of gold. The ratio was 84.21 on Friday.

Outlook for the rest of the session:

--MCX gold seen at 71,500–72,400 rupees per 10 gm

--COMEX gold seen at $2,525–$2,565 an oz

--MCX silver seen at 84,800-86,400 rupees per kg

--COMEX silver seen at $30.45-$30.80 an oz

End

US$1 = 83.90 rupees

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

Edited by Manisha Baxla

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