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Informist, Wednesday, Sep 25, 2024

By Sandeep Sinha

MUMBAI – Futures contracts of gold rose on the Multi Commodity Exchange of India and the COMEX today because heightened geopolitical tensions in West Asia boosted safe-haven demand. The positive sentiment was further aided by inflows into exchange-traded funds and the expectation of further rate cuts by the US Federal Reserve.

On Tuesday, gold holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 1.73 tn to 877.12 tn, the highest since Jan 2. The fund has a market value of $74.32 bln.

"The bull run continues for the yellow metal, which attains fresh highs. Gold prices have risen over 28% in the international market, and over 19% in the domestic market, whereas the gains for the Indian equity benchmark - Nifty have been nearly 19%. Gold has outperformed most asset classes in CY24," said Nish Bhatt, founder and chief executive officer, Millwood Kane International, in an email note.

"Gold has scaled fresh highs with $2,700 per oz in sight in the international market, whereas the 76,000 rupees level has been attained in the domestic market. The rally in gold is due to a combination of factors, primarily it is on expectation of further rate cuts by the US Fed, this also implies the beginning of a rate-easing cycle after four years. Rates are expected to stay lower for longer from here on," Bhatt said.

At 1942 IST, the most-active October GOLD contract on the MCX was up 0.4% at 75,272 rupees per 10 gm. The most active December contract on COMEX was 0.4% higher at $2,688.2 per ounce. Gold prices touched a fresh lifetime high of 76,000 rupees per 10 gm on MCX and $2,694.9 per oz on the COMEX earlier in the day. 

The highest call open interest for gold was at the 77,000-rupee strike price, suggesting a bullish view, while the highest put open interest was at the 74,000-rupee strike for the Nov 26 gold contract.

However, further upside in yellow metal was restricted by a firm dollar, which makes commodities priced in the greenback expensive for holders of other currencies. At 2000 IST, the dollar index, which measures the strength of the greenback against a basket of major currencies, was up 0.2% at 100.51.

SILVER prices rose taking firm cues from gold and industrial metals. At 1948 IST, the most active December contract of silver on MCX was up 0.2% at 92,619 rupees per kg. The same-month contract on COMEX was 0.1% lower at $32.41 per oz.

The MCX Bulldex, an index that tracks the real-time performance of gold and silver futures on the MCX, was up 73 points at 18950 points. As of 1950 IST, the October and December gold contracts recorded turnovers of 32.67 bln rupees and 23.57 bln rupees, respectively, on the MCX. The December and March contracts of silver saw turnover of 36.27 bln rupees and 1.68 bln rupees, respectively.

Outlook for rest of the session:

--MCX gold seen at 74,700–75,600 rupees per 10 gm

--COMEX gold seen at $2,656.33–$2,698.63 an oz

--MCX silver seen at 90,800-93,300 rupees per kg

--COMEX silver seen at $31.40-$33.67 an oz

End

US$1 = 83.59 rupees

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

Edited by Akul Nishant Akhoury

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