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Informist, Wednesday, Aug 28, 2024

By Sayantan Sarkar

MUMBAI – Futures contracts of gold fell today on the Multi Commodity Exchange of India, tracking those on COMEX as positive economic data from the US dampened safe-haven demand for the precious metal.

US Conference Board Consumer Confidence Index rose to 103.3 in August from 101.9 in July. The positive data raised concerns about a possible interest rate cut by the US Federal Reserve at its September meeting. This weighed on gold prices.

"Gold is moving lower on Wednesday as data out over the last few days paints a mixed picture of the state of the US economy," fxstreet.com said in a report. "Despite these releases, the market's expectations for the trajectory of US interest rates appear little changed," according to the report. The probability of the Fed undertaking a 50 basis points cut in September remains at mid-30%, according to the CME FedWatch Tool. 

Lower interest rates bode well for commodities such as gold and silver as they increase liquidity in the economy and reduce borrowing costs for the public, making investments in these precious metals attractive.

Rise of the dollar against a basket of six major currencies also dented demand for both gold and silver on the COMEX. A stronger greenback makes commodities priced in the US currency more expensive for overseas buyers.

At 2042 IST, the most-active October gold contract on the MCX was down 0.5% at 71,800 rupees per 10 gm. The same-month contract on the COMEX was 0.5% lower at $2,540.6 per ounce.

Investors will look forward to the US Core Personal Consumption Expenditures Price Index data, the preferred inflation gauge of the US Federal Reserve, on Friday.

At 2042 IST, the most-active December contract for silver on the MCX was down 1.7% at 86,799 rupees per kg. The same-month contract on the COMEX was 2.0% lower at $29.80 per ounce.

Outlook for the rest of the session:

--MCX gold seen at 71,600–72,250 rupees per 10 gm

--COMEX gold seen at $2,470–$2,532 an oz

--MCX silver seen at 83,300-87,100 rupees per kg

--COMEX silver seen at $29.35-$29.96 an oz

End

US$1 = 83.95 rupees

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

Edited Ashish Shirke

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