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Informist, Friday, Oct. 18, 2024

By Sandeep Sinha

MUMBAI – Futures contracts of gold hit new all-time highs on the Multi Commodity Exchange of India and COMEX on Friday, as concerns over escalating tensions in West Asia and jitters ahead of the US presidential election boosted bullion's safe-haven appeal. A weak dollar, which makes commodities priced in the greenback cheaper for holders of other currencies, also lifted sentiment for the precious metal.

Investors sought protection of bullion after Israel announced the killing of Hamas leader Yahya Sinwar and Prime Minister Benjamin Netanyahu said Israel would keep fighting until all the hostages seized by Hamas last year are free. On the other hand, Lebanese militant group Hezbollah said it was increasing its fight against Israel, saying that it had used precision-guided missiles for the first time.

"Safe-haven demand amid heightened geopolitical risks as well as uncertainty ahead of the US election in November have also supported gold's record-breaking rally this year," Warren Patterson, head of commodities strategy, and Ewa Manthey, commodities strategist at ING Economics, said in a note. Gold is one of this year's strongest performing commodities, with gains of over 30% so far, supported by rate-cut optimism, strong central bank buying, and robust Asian purchases, they said.

At 1825 IST, the most-active December GOLD contract on the MCX was up 0.7% at INR 77,620 per 10 gm. The December contract hit an all-time high of INR 77,730 intraday Friday. The most-active December contract on COMEX was up 0.7% at $2,725.80 per ounce. It hit a fresh lifetime high of $2,732.3 earlier in the day. The highest call open interest for gold was at the INR 78,000 strike price, suggesting a bullish view. The highest put open interest was at the INR 74,000 strike for the Nov. 26 gold contract.

At 1840 IST, the dollar index, which measures the strength of the greenback against a basket of major currencies, was down 0.2% at 103.52. For further cues on Fed's interest rate trajectory, investors are waiting for a speech by US Federal Open Market Committee member Christopher Waller later in the day.

On Thursday, the gold holdings of SPDR Gold Trust, the world's largest gold-backed ETF, remained steady at 884.59 tonnes. The fund has a market value of $76.43 billion.

However, the record gold prices dampened retail demand from top consumers China and India. Buyers are deferring purchases as they deem prices to be excessively high and are waiting for prices to correct.

SILVER prices rose taking cues from COMEX and positive trends in gold and base metals. At 1840 IST, the most-active December contract of silver on the MCX was up 1.7% at INR 93,301 per kg. The same-month contract on COMEX was 2.1% higher at $32.46 per ounce.

The MCX Bulldex, an index that tracks the real-time performance of gold and silver futures on the MCX, was up 156 points at 19242 points. As of 1842 IST, the December and February gold contracts recorded turnovers of INR 31.99 billion and INR 3.07 billion, respectively, on the MCX. The December and March silver contracts saw turnovers of INR 37.95 billion and INR 2.12 billion, respectively.

The spot gold-silver ratio, also known as the Mint ratio, fell to 84.16, indicating that gold had underperformed silver. The ratio measures the ounces of silver required to buy an ounce of gold. The ratio was 84.40 on Thursday.

Outlook for the rest of the session:

--MCX gold seen at INR 77,100–INR 78,000 per 10 gm

--COMEX gold seen at $2,692.00–$2,740.00 an ounce

--MCX silver seen at INR 92,200-INR 94,300 per kg

--COMEX silver seen at $31.85-$32.70 an ounce

End

US$1 = INR 84.07

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

Edited by Ashish Shirke

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