India Bullion
Gold prices up on safe-haven appeal, weaker dollar
This story was originally published at 18:46 IST on 18 November 2024
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By Sandeep Sinha
MUMBAI – Futures contracts of gold rose on the Multi Commodity Exchange of India Monday, tracking gains on COMEX, as the escalating conflict between Russia and Ukraine boosted the bullion metal's safe-haven appeal. The positive momentum in the metal was aided by a weaker dollar, which makes commodities priced in the greenback cheaper for holders of other currencies.
At 1615 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was down 0.1% at 106.59.
GOLD also got a boost from the Reserve Bank of India's increased purchases of the yellow metal and inflows in exchange-traded funds. The Indian central bank's gold holdings reached an all-time high of 882 tonnes in October after it bought 28 tonnes last month, the World Gold Council said in a note.
On Friday, gold holdings with the SPDR Gold Trust, the world's largest gold-backed ETF, rose by 2.56 tonnes to 869.93 tonnes. The fund has a market value of $71.92 billion. On the National Stock Exchange, the total value of gold ETFs traded was INR 1.52 billion, down from INR 1.68 billion Thursday.
"The yellow metal is slightly up today on geopolitical concerns as the US Administration has allowed Ukraine to use American ATACMS missiles for limited strikes inside Russia. Russian lawmakers have warned that such a step would be a big move towards the third world war," Praveen Singh, associate vice-president, fundamental currencies and commodities, at Sharekhan by BNP Paribas said in an email note.
At 1615 IST, the most-active December gold contract on the MCX was up 0.9% at INR 74,595 per 10 gram. The most-active December contract on COMEX was 1% higher at $2,597.0 per ounce. The highest call open interest for gold was at the INR 76,000-77,000 strike price, suggesting a bullish view. The highest put open interest was at the INR 74,000-73,000 strike for the Nov. 26 gold contract.
"Hawkish comments from Fed (US Federal Reserve) members and declining probability of more rate cuts in the coming year would restrict upside in bullions," ICICI Securities said in a note.
Market participants will watch for updates from the Group of 20 summit in Brazil for further cues.
SILVER prices also rose, taking cues from COMEX and positive trends in gold. At 1620 IST, the most-active December contract of silver on the MCX was up 1.1% at INR 89,429 per kg. The same-month contract on COMEX was 1.3% higher at $30.82 per ounce.
On the options front, the highest call open interest for silver was at the INR 90,000-100,000 strike price. 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 up 109 points at 18525 points. As of 1620 IST, the December and February gold contracts recorded turnovers of INR 25.17 billion and INR 9.04 billion, respectively, on the MCX. The December and March silver contracts saw turnovers of INR 12.27 billion and INR 3.88 billion, respectively.
The spot gold-silver ratio, also known as the Mint ratio, fell to 84.33, indicating that silver had outperformed gold. The ratio measures the ounces of silver required to buy an ounce of gold. The ratio was 84.72 on Friday.
Outlook for the rest of the session:
--MCX gold seen at INR 73,800–75,100 per 10 gm
--COMEX gold seen at $2,550.0–$2,625.0 an ounce
--MCX silver seen at INR 88,800-90,150 per kg
--COMEX silver seen at $30.16-$31.17 an ounce
End
US$1 = INR 84.38
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Rajeev Pai
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