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Informist, Monday, Oct. 28, 2024

By Sandeep Sinha

MUMBAI – Futures contracts of gold fell on the Multi Commodity Exchange of India and COMEX today because of reduced safe-haven appeal as concerns of war between Israel and Iran eased. The sentiment was also weighed down by outflow of gold exchange-traded funds.

Israel on Saturday carried out limited strikes on Iran, targeting military assets rather than oil and nuclear facilities. The limited impact of these attacks, along with comments from both sides, suggests both sides like to avoid war.

On Friday, the gold holdings of SPDR Gold Trust, the world's largest gold-backed ETF, fell by 4.02 tonnes to 889.78 tonnes. The fund has a market value of $78.12 billion.

"Gold prices experienced a decline at the beginning of the week, down by INR 350 on MCX at INR 78,150 and weakened by $17 in Comex to $2,730, as profit booking emerged amid signs of de-escalation in the Israel-Iran conflict. The absence of major damage to oil and nuclear sites in Israel’s weekend attacks has eased immediate war concerns, reducing the safe-haven demand for gold," Jateen Trivedi, vice-president and research analyst at LKP Securities, said in a note. "Should geopolitical tensions remain subdued, gold’s war premium may continue to fade, with potential tests of $2,700 to $2,680 in the near term."

At 1832 IST, the most-active December GOLD contract on the MCX was down 0.3% at INR 78,275 per 10 gm. The most-active December contract on the COMEX was 0.3% lower at $2,741.40 per ounce. The highest call open interest for gold was at the INR 78,000-80,000 strike price, suggesting a bullish view. The highest put open interest was at the INR 75,000-74,000 strike for the Nov. 26 gold contract.

However, the downside in yellow metal was cushioned by weakness in the dollar, which makes commodities priced in the greenback cheaper for holders of other currencies. At 1837 IST, the dollar index, which measures the strength of the greenback against a basket of major currencies, was down 0.2% at 104.20.

SILVER prices were steady, taking cues from the COMEX, as weakness in gold and industrial metals was offset by a weaker dollar. At 1840 IST, the most-active December contract of silver on the MCX was flat at INR 97,105 per kg. The same-month contract on COMEX was steady at $33.78 per ounce.

The MCX Bulldex, an index that tracks the real-time performance of gold and silver futures on the MCX, was up just 2 points at 19600 points. As of 1842 IST, the December and February gold contracts recorded turnovers of INR 25.16 billion and INR 3.86 billion, respectively, on the MCX. The December and March silver contracts saw turnovers of INR 27.02 billion and INR 1.34 billion, respectively.

The spot gold-silver ratio, also known as the Mint ratio, fell to 81.38, indicating that gold had underperformed silver. The ratio measures the ounces of silver required to buy an ounce of gold. The ratio was 81.49 on Friday.

Outlook for the rest of the session:

--MCX gold seen at INR 77,901–INR 78,605 per 10 gm

--COMEX gold seen at $2,720.00–$2,760.00 an ounce

--MCX silver seen at INR 95,611-INR 97,940 per kg

--COMEX silver seen at $33.45-$34.10 an ounce

End

US$1 = INR 84.08

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

Edited by Manisha Baxla

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