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Informist, Monday, Sep 9, 2024

By Afra Abubacker

NEW DELHI – Futures contracts of GOLD on the Multi Commodity Exchange of India and the COMEX were broadly flat as the market speculated on the quantum of expected interest rate cuts by the US Federal Reserve later this month. For cues on the quantum of the rate cut, investors await August's consumer price index on Wednesday and producer price index data on Thursday. 

"Gold prices remained steady on Monday and were trading slightly below the key $2,500 an ounce level, as the market awaited August inflation data for further insights into the anticipated Federal Reserve interest rate cut this month," SMC Global Securities said in a report.  

On Friday, Federal Reserve Governor Christopher Waller said "the time has come" for the central bank to begin a series of interest rate cuts this month. Lower interest rates reduce the opportunity cost of holding the non-yielding precious metal. 

US non-farm payrolls increased by 142,000 in August, against 89,000 in July, data by the US Bureau of Labor Statistics showed on Friday. Analysts at Dow Jones had estimated the payrolls addition to come in at 161,000. 

"Gold may trade in the range of 71,200-71,600 rupees per 10 gm, and silver also trades in the range of 82,500-83,100 rupees per kg, with sideways to bullish bias," SMC said. 

Meanwhile, China's central bank held back on buying gold for its reserves for a fourth straight month in August, official data showed on Saturday. China's gold holdings stood at 72.8 mln fine troy ounces at the end of August. The value of the gold reserves, however, rose to $182.98 bln from $176.64 bln at the end of July.

At 1512 IST, the most active October GOLD contract on the MCX was flat at 71,430 rupees per 10 gm. The most active December contract on the COMEX was flat at $2,524.8 per oz. A firm dollar also kept gold in a tight range, as the commodity is priced in the greenback. 

"A break above $2,530 per ounce would extend rallies. Else, choppy trades are expected for the day," Geojit Financial Services said in a note. 

Prices are likely to be boosted by the anticipation of rate cuts and safe-haven demand amid ongoing geopolitical tensions. "Demand for gold-backed ETFs has also seen a revival, with global inflows four months in a row," Dow Jones quoted ING as saying. 

At 1520 IST, the most active December contract of silver on the MCX was up 0.6% at 83,255 rupees per kg. The same-month contract on the COMEX was 1.1% higher at $28.48 per oz. "A direct drop below $27.50 would liquidate prices further. Else, mild upticks would be seen," Geojit said.  

Outlook for the rest of the session:

--MCX gold seen at 71,200-71,600 rupees per 10 gm

--COMEX gold seen at $2496.2-2536.0 an oz

--MCX silver seen at 82,500-83,100 rupees per kg

--COMEX silver seen at $28.38 $29.53 an oz

End

US$1 = 83.96 rupees

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

Edited by Avishek Dutta

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