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Informist, Monday, Nov. 11, 2024

By Sandeep Sinha

MUMBAI – Futures contracts of gold fell on the Multi Commodity Exchange of India Monday, tracking a fall on COMEX, as the dollar strengthened for the second straight day. The sentiment was also weighed down by outflows from gold exchange-traded funds and by money managers paring their long positions.

"Renewed strength in the dollar and a surge in US Treasury yields crimped investor demand for the precious metals," Daniel Hynes, senior commodities strategist at ANZ Research, said in a note.

At 1610 IST, the dollar index, which measures the strength of the greenback against a basket of major currencies, was up 0.3% at 105.29. A stronger greenback makes dollar-denominated precious commodities more expensive for those holding other currencies, dulling demand. 

On Friday, GOLD holdings with SPDR Gold Trust, the world's largest gold-backed ETF, fell for the fifth straight day by 3.73 tonnes to 876.85 tonnes. The fund has a market value of $75.83 billion. On the National Stock Exchange, the total value of gold ETFs traded was INR 1.62 billion, up from INR 1.39 billion on Friday.

Money managers decreased their net long positions in COMEX gold by 15,596 lots to 221,747 as of Nov. 5, the lowest in three months, signalling weak sentiment for the yellow metal, according to Commodity Futures Trading Commission data.

"Gold prices fell to a one-month low of $2,650.30 per ounce last week, as investor sentiment shifted toward risk assets following Trump's election victory and the Republican Party’s successful bid to regain control of the US Senate," Kaynat Chainwala, associate vice-president, commodity research, Kotak Securities, said in a note.

At 1610 IST, the most-active December gold contract on the MCX was down 0.7% at INR 76,717 per 10 gram. The most-active December contract on COMEX was 0.7% lower at $2,676.0 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.

On the technical front, Enrich Money expects a further downside in gold in the upcoming sessions. If the market breaks below the current support level of INR 77,050, it may decline to INR 76,370 and INR 75,650 levels. However, if the price breaks above the resistance level of INR 77,790, it could signal an upward trend, potentially leading to a rise to INR 78,560 and INR 79,250 levels.

"We consider this a healthy price correction as our long-term bullish view remains in place for gold. Growing deficits, mounting trade and geopolitical uncertainty will continue to favour haven demand," Hynes said.

SILVER prices rose, taking cues from COMEX. However, a further upside was restricted by the firm dollar and weakness in gold. At 1610 IST, the most-active December contract of silver on the MCX was up 0.2% at INR 91,410 per kg. The same-month contract on COMEX was 0.4% higher at $31.56 per ounce.

On the options front, the highest call open interest for silver was at the INR 100,000-105,000 strike price, suggesting a bullish view. The highest put open interest was at INR 90,000-85,000 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 129 points at 19025 points. As of 1606 IST, the December and February gold contracts recorded turnovers of INR 27.83 billion and INR 8.34 billion, respectively, on the MCX. The December and March silver contracts saw turnovers of INR 14.73 billion and INR 3.22 billion, respectively.

The spot gold-silver ratio, also known as the Mint ratio, fell to 84.86, indicating that gold had underperformed silver. The ratio measures the ounces of silver required to buy an ounce of gold. The ratio was 85.74 on Friday.

Outlook for the rest of the session:

--MCX gold seen at INR 76,380–77,590 per 10 gm

--COMEX gold seen at $2,650.0–$2,710.0 an ounce

--MCX silver seen at INR 90,690-92,160 per kg

--COMEX silver seen at $31.10-$31.96 an ounce

End

US$1 = INR 84.39

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

Edited by Rajeev Pai

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