More Stories

Informist, Friday, Sep 13, 2024

By Sayantan Sarkar

NEW DELHI – Gold contracts on the Multi Commodity Exchange of India rose to a near two-month high today, while those on the COMEX hit a record high on growing expectations that the US Federal Reserve will cut interest rates next week.

The gold market is waiting for the Fed to cut interest rates for the first time in four and a half years. "We expect a small rate cut. Since the market has already widely anticipated a reduction in interest rates, we do not expect significant price movements in the gold market after the price rose to a record high," Commerzbank AG said in a report today. 

Lower interest rates increase liquidity in the economy, while borrowing costs also decline. This enables investors to park more money in non-yielding assets such as gold and silver. 

The most-active October contract of gold on the MCX hit a near two-month high of 73,545 rupees per 10 gm earlier today. The December contract on the COMEX hit an all-time high of $2,611.60 per ounce. The positive sentiment in the gold market was aggravated after the European Central Bank cut interest rates by 25 basis points to 3.50% on Thursday. 

Additionally, "the market is still expecting the Fed to cut interest rates by around 100 basis points by the end of the year, i.e. rates would have to be cut by 50 basis points at one of the two remaining meetings after September," Commerzbank said. According to Fed funds futures, a further 100 basis points are then expected to follow by mid-2025. "It is therefore likely, due to these aggressive interest rate cut expectations for the coming months that the gold price is rising," the German bank said. 

Experts also expect the European Central Bank to cut interest rates further before the end of the year. 

Today, global prices of bullion were also supported as the dollar fell against a basket of major currencies. A weaker dollar makes commodities priced in the greenback cheaper for overseas buyers.  

At 1933 IST, the most-active October GOLD contract on the MCX was at 73,325 rupees per 10 gm, up 0.7% from the previous close. The most-active December contract on the COMEX was 0.9% higher at $2,602.2 per ounce.

The most-active December contract of SILVER on the MCX was at 89,042 rupees per kg, up 2.3% from the previous close. The same-month contract on the COMEX was 2.7% higher at $30.922 per ounce.

Outlook for the rest of the session:

--MCX gold seen at 72,800-73,500 rupees per 10 gm

--COMEX gold seen at $2,552-$2,650 an ounce

--MCX silver seen at 87,000-89,900 rupees per kg

--COMEX silver seen at $29.75-$31.40 an ounce

End

US$1 = 83.88 rupees

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

Edited by Vidhi Verma

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (11) 4220-1000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2024. All rights reserved.