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Informist, Monday, Sep 23, 2024

By Sandeep Sinha

MUMBAI – Futures contracts of gold rose on the Multi Commodity Exchange of India and COMEX today because of safe-haven demand due to increasing tensions in West Asia. Inflows into gold exchange-traded funds also added to the positive sentiment.

Money managers increased their net long position in COMEX gold by 25,919 lots to 252,628 as of Sep 17, indicating positive sentiment for the yellow metal, according to Commodity Futures Trading Commission data. "This is the largest position that speculators have held in gold since March 2020. There has been a significant rise in gold prices as the Federal Reserve started its interest rate cut cycle with a significant 50 basis points cut at its recent meeting, which supported these flows," ING Economics said in a note.

On Friday, gold holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose by 1.43 tn to 875.39 tn, the highest since Jan 2. The fund has a market value of $73.33 bln.

"The outlook for the bullion metal remains constructive as traders gun for $2,700/oz in the near-term, though weak Chinese demand remains a concern. Sales in China in late August and early September were down at least 50% compared with a year earlier," Praveen Singh, associate vice president, fundamental currencies and commodities at Sharekhan by BNP Paribas said in an email note. The metal is expected to find good support at dips as concerns about the US job market and Chinese economy linger, he said.

At 1825 IST, the most active October gold contract on the MCX was up 0.3% at 74,247 rupees per 10 gm. The most active December contract on COMEX was 0.2% higher at $2,650.80 per oz. The highest call open interest for gold was at the 75,000-rupee strike price, suggesting a bullish view, while the highest put open interest was at the 73,000-rupee strike for the Sep 24 gold contract.

Investors will take further cues from the US flash manufacturing and services purchasing managers' index to be released later today. They will also watch out for speeches from Federal Reserve Open Market Committee members Austan Goolsbee and Neel Kashkari later in the day.

SILVER prices fell, taking cues from the COMEX, because of a firm dollar. A stronger dollar makes dollar-denominated commodities expensive for holders of other currencies. At 1835 IST, the most active December contract of silver on MCX was down 0.6% at 89,616 rupees per kg. The same-month contract on COMEX was 0.9% lower at $31.21 per oz.

The MCX Bulldex, an index that tracks the real-time performance of gold and silver futures on the MCX, was down 22 points at 18569 points. As of 1835 IST, the October and December gold contracts recorded turnovers of 46.79 bln rupees and 28.10 bln rupees, respectively, on MCX. The December and March contracts of silver saw turnovers of 36.35 bln rupees and 1.74 bln rupees, respectively.

The spot gold-silver ratio, also known as the Mint ratio, rose to 85.19, indicating that gold outperformed silver. The ratio measures the ounces of silver required to buy an ounce of gold. The ratio was 84.12 on Friday.

Outlook for the rest of the session:

--MCX gold seen at 73,750–74,800 rupees per 10 gm

--COMEX gold seen at $2,620.00–$2,662.00 an oz

--MCX silver seen at 88,300-90,500 rupees per kg

--COMEX silver seen at $30.75-$31.82 an oz

End

US$1 = 83.55 rupees

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

Edited by Saji George Titus

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