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Informist, Wednesday, Oct. 23, 2024

By Sandeep Sinha

MUMBAI – Futures contracts of gold erased earlier gains and traded in the red on the Multi Commodity Exchange of India and COMEX on Wednesday because of a recovery in the dollar, which makes commodities priced in the greenback expensive for holders of other currencies. The sharp uptick in the past few sessions led investors to book profit at higher levels.

At 1803 IST, the dollar index, which measures the strength in the greenback against a basket of six major currencies, was up 0.5% at 104.54. Investors will take further cues from the US initial jobless claims to be released Thursday.

"If jobless claims remain low, it would point to a stronger US economy, which could temper expectations of aggressive interest rate cuts. This could, in turn, trigger some profit-booking in gold after the recent bull run," Praveen Singh, associate vice president, fundamental currencies and commodities at Sharekhan by BNP Paribas, said in an email note. In such a scenario, a retracement towards the support levels of INR 77,000-INR 77,500 in MCX is possible, especially if jobless data indicates better economic strength. However, as long as gold remains above these support levels, the overall trend remains bullish, Singh said.

At 1826 IST, the most-active December GOLD contract on the MCX was down 0.1% at INR 78,563 per 10 gm. The December contract hit an all-time high of INR 78,919 earlier Wednesday. The most-active December contract on COMEX was down 0.2% at $2,755.0 per ounce. It hit a fresh lifetime high of $2,772.6 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.

However, the downside in the yellow metal was limited due to uncertainty about the US presidential election, which boosted safe-haven demand and led to continued inflows into gold exchange-traded funds. The ongoing geopolitical tension in West Asia also cushioned the downside in gold.

On Tuesday, the gold holdings of SPDR Gold Trust, the world's largest gold-backed ETF, rose by 3.45 tonnes to 895.24 tonnes, the highest since Aug. 14, 2023. The fund has a market value of $78.75 billion.

SILVER prices fell, taking cues from COMEX, because of profit-taking and negative trends in gold and base metals. At 1815 IST, the most-active December contract of silver on the MCX was down 1.2% at INR 98,793 per kg. The December contract hit an all-time high of INR 100,081 intraday Wednesday. The same-month contract on COMEX was 1.4% lower at $34.56 per ounce.

The MCX Bulldex, an index that tracks the real-time performance of gold and silver futures on the MCX, was down 43 points at 19790 points. As of 1817 IST, the December and February gold contracts recorded turnovers of INR 24.26 billion and INR 2.54 billion, respectively, on the MCX. The December and March silver contracts saw turnovers of INR 25.88 billion and INR 1.59 billion, respectively.

The spot gold-silver ratio, also known as the Mint ratio, rose to 79.82, indicating that gold had outperformed silver. The ratio measures the ounces of silver required to buy an ounce of gold. The ratio was 79.32 on Tuesday.

Outlook for the rest of the session:

--MCX gold seen at INR 78,250–INR 78,930 per 10 gm

--COMEX gold seen at $2,744.00–$2,788.00 an ounce

--MCX silver seen at INR 98,500-INR 100,300 per kg

--COMEX silver seen at $34.00-$35.50 an ounce

End

US$1 = INR 84.08

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

Edited by Tanima Banerjee

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