India Bullion
Gold prices fall as Trump victory pushes dollar higher
This story was originally published at 19:42 IST on 6 November 2024
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By Sandeep Sinha
MUMBAI – Futures contracts of gold fell on the Multi Commodity Exchange of India and the COMEX Wednesday as Republican candidate Donald Trump won the US presidential election, leading to a sharp rally in the dollar. The outflow in gold exchange-traded funds and rally in riskier assets such as equity and cryptocurrency also weighed on the yellow metal’s safe-haven appeal.
At 1750 IST, the dollar index, which measures the strength in the greenback against a basket of major currencies, was up 1.7% at 105.20, the highest since Jul. 10. A stronger greenback makes dollar-denominated precious commodities more expensive for holders of other currencies, dulling the demand for gold.
On Tuesday, the gold holdings of SPDR Gold Trust, the world's largest gold-backed ETF, fell by 1.72 tonnes to 886.91 tonnes. The fund has a market value of $78.17 billion. On the National Stock Exchange, the total value of gold ETF traded was INR 1.86 billion, up from INR 1.76 billion on Tuesday.
"Gold prices temporarily broke lower before finding support ahead of $2,700, weighed down by ongoing US dollar strength as markets consider the Federal Open Market Committee’s (FOMC) potential response to inflation risks," said Ole Hansen, head of commodity strategy at Saxo Bank, in a note.
At 1750 IST, the most-active December GOLD contract on the MCX was down 1% at INR 77,746 per 10 gram. The most-active December contract on COMEX was 1.2% lower at $2,716.20 per ounce. The highest call open interest for gold was at the INR 79,000-INR 80,000 strike price, suggesting a bullish view. The highest put open interest was at the INR 75,000-INR 74,000 strike for the Nov. 26 gold contract.
On the technicals, Reliance Securities said the gold price structure has shifted from an uptrend to a downtrend, with a breakdown from the trend line, indicating a potential for further downside movement. The brokerage firm recommends going short in the evening session.
SILVER prices tumbled, taking cues from the COMEX and weak trends in gold and base metals. At 1750 IST, the most-active December contract of silver on the MCX was down 2% at INR 92,746 per kg. The same-month contract on the COMEX was 2.3% lower at $32.03 per ounce.
"Silver is worth watching as a potential driver of gold prices after the metal suffered a technical breakdown, reflecting the overall weakness seen across industrial metals," Hansen said.
On the options front, the highest call open interest for silver was at the INR 100,000-INR 105,000 strike price, suggesting a bullish view. The highest put open interest was at the INR 90,000-INR 85,000 strike for the Nov. 26 silver expiry.
The MCX Bulldex, an index that tracks the real-time performance of gold and silver futures on the MCX, was down 261 points at 19275 points. As of 1740 IST, the December and February gold contracts recorded turnovers of INR 57.18 billion and INR 1.39 billion, respectively, on the MCX. The December and March silver contracts saw turnovers of INR 59.60 billion and INR 11.04 billion, respectively.
The spot gold-silver ratio, also known as the Mint ratio, rose to 84.81, indicating that gold had outperformed silver. The ratio measures the ounces of silver required to buy an ounce of gold. The ratio was 83.99 on Tuesday.
Outlook for the rest of the session:
--MCX gold seen at INR 77,020–INR 78,400 per 10 gm
--COMEX gold seen at $2,700.0–$2,755.0 an ounce
--MCX silver seen at INR 90,450-INR 94,400 per kg
--COMEX silver seen at $31.70-$32.90 an ounce
End
US$1 = INR 84.28
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Akul Nishant Akhoury
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