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Informist, Wednesday, Oct. 16, 2024

By Sandeep Sinha

MUMBAI – Futures contracts of gold on the Multi Commodity Exchange of India rose, taking cues from COMEX, on heightened geopolitical tensions with Israel preparing to launch a retaliatory strike against Iran and China launching a military drill encircling Taiwan, boosting the yellow metal's safe-haven demand. The positive sentiment was further aided by continued inflows in gold exchange-traded funds.

"The geopolitical situation in Middle East (West Asia) has further bolstered safe-haven demand for gold, adding to its upward momentum," Jateen Trivedi, vice-president and research analyst at LKP Securities, said in an email note. Traders continue to position themselves on expectations that the US Federal Reserve will maintain its rate-cut trajectory, Trivedi said, sustaining bullish sentiment around the bullion metal, which reached record highs in September.

At 2038 IST, the most active December GOLD contract on the MCX was up 0.2% at INR 76,522 per 10 gm. The December contract hit an all-time intraday high of INR 76,890 Wednesday. The most active December contract on COMEX was 0.3% higher at $2,686.3 per ounce. The highest call open interest for gold was at the INR 77,000 strike price, suggesting a bullish view, while the highest put open interest was at the INR 74,000 strike for the Nov. 26 gold contract.

On Tuesday, the gold holdings of SPDR Gold Trust, the world's largest gold-backed ETF, rose by 4.02 tonnes to 884.59 tonnes, the fourth straight day of inflows. This took the fund's gold holdings to their highest level since Sept. 12, 2023. The fund has a market value of $75.30 billion. The fund has received 12.65 tonnes of inflows so far in October.

However, further upside in gold was limited by the dollar's strength, which makes commodities priced in the greenback expensive for holders of other currencies. At 2044 IST, the dollar index, which measures the US currency's strength against a basket of six major currencies, was up 0.2% at 103.41.

SILVER prices rose, taking cues from COMEX and a positive trend in gold. At 2046 IST, the most active December contract of silver on the MCX was up 0.5% at INR 92,079 per kg. The same-month contract on COMEX was 0.5% higher at $31.91 per ounce.

The MCX Bulldex, an index that tracks the real-time performance of gold and silver futures on the MCX, was up by 65 points at 19035 points. As of 2047 IST, the December and February gold contracts recorded turnovers of INR 34.85 billion and INR 2.09 billion, respectively, on the MCX. The December and March silver contracts saw turnovers of INR 44.19 billion and INR 2.28 billion, respectively.

The spot gold-silver ratio, also known as the Mint ratio, fell to 84.23, indicating that gold had underperformed silver. The ratio measures the ounces of silver required to buy an ounce of gold. The ratio was 85.10 on Tuesday.

Outlook for the rest of the session:

--MCX gold seen at INR 76,000–INR 76,850 per 10 gm

--COMEX gold seen at $2,660.00–$2,700.50 an ounce

--MCX silver seen at INR 91,600-INR 92,800 per kg

--COMEX silver seen at $31.60-$32.20 an ounce

End

US$1 = INR 83.99

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

Edited by Rajeev Pai

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