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Informist, Tuesday, Nov. 12, 2024

By Sandeep Sinha

MUMBAI – Futures contracts of gold fell on the Multi Commodity Exchange of India Tuesday, tracking a fall on COMEX, as the dollar continued its uptrend for a third successive day on expectations of make-in-America policies by the incoming Donald Trump administration. Persistent outflows from gold exchange-traded funds also weighed on prices.

At 1622 IST, the dollar index, which measures the strength of the greenback against a basket of major currencies, was up 0.4% at 105.89. A stronger greenback makes dollar-denominated precious commodities more expensive for those holding other currencies, depressing demand.

On Monday, GOLD holdings with SPDR Gold Trust, the world's largest gold-backed ETF, fell for the sixth consecutive day by 4.88 tonnes to 871.97 tonnes. The fund has a market value of $73.55 billion. On the National Stock Exchange, the total value of gold ETFs traded was INR 2.2 billion, up from INR 1.62 billion on Monday.

"Gold continued to face significant pressure as the strength in the dollar index kept prices under $2,600 on COMEX, with a drop of $24. On MCX, gold fell by over INR 500, reaching INR 74,750 and slipping below INR 75,000 for the first time since October 10. The current downtrend suggests that further weakness could persist, potentially driving prices down towards INR 72,000 if COMEX gold remains below $2,600 and tests the $2,500 level in the upcoming sessions," Jateen Trivedi, vice-president and research analyst at LKP Securities, said in an email note. Key events this week, including the US CPI data and a speech by Federal Reserve Chair Jerome Powell, will be critical in providing further direction to gold prices, he said.

At 1622 IST, the most-active December gold contract on the MCX was down 0.7% at INR 74,861 per 10 gram. The most-active December contract on COMEX was 0.5% lower at $2,603.0 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.

"Gold may continue to trade with a bearish tilt in the short term. Sellers eye the $2,500 mark. Interim support is at $2,580-$2,540 and resistance is at $2,640-$2650," Praveen Singh, associate vice-president, fundamental currencies and commodities, at Sharekhan by BNP Paribas said.

SILVER prices tumbled, taking cues from COMEX and weak trends in gold and base metals. At 1622 IST, the most-active December contract of silver on the MCX was down 0.8% at INR 88,617 per kg. The same-month contract on COMEX was 0.5% lower at $30.45 per ounce.

On the options front, the highest call open interest for silver was at the INR 95,000-100,000 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.

On the technical front, Reliance Securities said the price of silver is forming a structure of lower lows and lower highs, with a trendline breakdown. Additionally, the Relative Strength Index is falling below 50, showing further weakness in the counter. The brokerage recommends going short in the evening session.

The MCX Bulldex, an index that tracks the real-time performance of gold and silver futures on the MCX, was down 170 points at 18551 points. As of 1604 IST, the December and February gold contracts recorded turnovers of INR 36.84 billion and INR 5.28 billion, respectively, on the MCX. The December and March silver contracts saw turnovers of INR 22.42 billion and INR 5.98 billion, respectively.

The spot gold-silver ratio, also known as the Mint ratio, rose to 85.57, indicating that gold had outperformed silver. The ratio measures the ounces of silver required to buy an ounce of gold. The ratio was 84.97 on Monday.

Outlook for the rest of the session:

--MCX gold seen at INR 74,217–76,443 per 10 gm

--COMEX gold seen at $2,569.20–$2,660.00 an ounce

--MCX silver seen at INR 87,100-90,900 per kg

--COMEX silver seen at $29.86-$31.45 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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