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Informist, Wednesday, Sep 25, 2024

--MCX Oct gold contract hits lifetime high of 76,000 rupees per 10 gm 

MUMBAI – Futures contracts of gold hit an all-time high of 76,000 rupees per 10 gm today on the Multi Commodity Exchange of India, tracking those on COMEX and on the back of a weakening dollar and growing expectations of more interest rate cuts by the US Federal Reserve.   

The Federal Reserve's interest rate cut last week and rising geopolitical tensions in West Asia have pushed up precious metal prices, Ajay Kedia, director of Kedia Advisory, said. The most-active October gold contract opened at 75,101 rupees per 10 gm today and rose 1.2% to hit a lifetime high of 76,000 rupees per 10 gm.

At the time of writing, gold price on the MCX was at 75,245 rupees per 10 gm, up 0.3% from its previous close. Kedia said support for MCX gold is at 73,800 rupees per 10 gm, as high volatility is seen in prices. The resistance lies at 76,440 rupees per 10 gm for the day, he said.

On COMEX, the most-traded December contract also hit a lifetime high of $2,694.9 per ounce today, up 0.6% from its previous day's close. At 0946 IST, the contract was at $2,685.9 per ounce, up 0.3% from its previous close. 

"Investors have flocked to gold as a safe-haven asset, with the situation in Lebanon worsening and global uncertainty mounting," Kedia Advisory said in a note. Israeli bombs rained down on Lebanon, killing at least 569 people, Al Jazeera reported. Hezbollah confirmed that senior leader Ibrahim Muhammad Qubaisi was killed on Tuesday, hours after Israel claimed it killed a top commander in a strike on Beirut's southern suburbs, the report said.

"The gold price continues to rush from a record high to (another) record high," Commerzbank said in a note. "Gold benefits from its role as a store of value in times of inflation and uncertainty, and as an interest-free investment in times of falling interest rates," it said.  

On the interest rate front, investors expect the US Federal Reserve to further cut key interest rates before the end of this year. According to the CME FedWatch tool, the probability of a 50-basis-point interest rate cut by the Fed in November is now at 60.7%, against 29.0% a week ago, and that of a 25-bps interest rate cut is at 39.3%. A week ago, 51.3% investors had priced in a 25-bps interest rate cut by the Fed.

Moreover, rising inflows into gold exchange-traded funds and robust central bank buying also supports gold prices, Kedia Advisory said. "This week, along with (Fed Chair) Powell, we have more than nine other Fed officials scheduled to speak. Any change in tone from the recent Fed meeting could trigger volatility in prices," Motilal Oswal said in a note.  End 

US$1 = 83.52 rupees

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

Reported by J. Navya Sruthi

Edited by Namrata Rao

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