India Bullion
Gold prices up on safe-haven appeal, dollar weakness
This story was originally published at 19:45 IST on 27 November 2024
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By Sandeep Sinha
MUMBAI – Futures contracts of gold rose on the Multi Commodity Exchange of India Wednesday, tracking gains on COMEX, due to a safe-haven appeal after Russia threatened to retaliate for Ukraine's attack with ATACMS missiles recently. 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 1800 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was down 0.4% at 106.46. According to the CME FedWatch tool, markets are now pricing a 63% chance of the Fed cutting interest rates by 25 basis points in December. The expectation of lower interest rates increases the appeal of non-yielding assets such as gold.
"Gold traded with strength as markets continued to factor in geopolitical tensions and dollar volatility. While the broader bullish trend in gold remains intact, short-term uncertainty persists. At INR 75,900 on MCX, gold is slightly off its peak but significantly above the INR 67,500 low seen during the Budget week. Investors are advised to adopt a SIP or dip-accumulation (systematic investment plan or buy on dips) strategy for better portfolio management, rather than attempting to time the market at current elevated levels," Jateen Trivedi, vice-president and research analyst at LKP Securities, said in an email note.
At 1800 IST, the most active December gold contract on the MCX was up 1.1% at INR 76,019 per 10 grams. The most active December contract on COMEX was 1.2% higher at $2,653.10 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 Dec. 31 gold contract.
On Tuesday, gold holdings with the SPDR Gold Trust, the world's largest gold-backed ETF, remained steady at 879.41 tonnes. The fund has a market value of $74.11 billion. On the National Stock Exchange, the total value of gold ETFs traded was INR 1.48 billion.
Market players await US data on GDP, core personal consumption expenditures and initial jobless claims data for further cues.
SILVER prices also rose, taking cues from COMEX, and positive trends in gold and industrial metals. At 1800 IST, the most active December contract of silver on the MCX was up 0.4% at INR 88,614 per kg. The same-month contract on COMEX was 0.5% higher at $30.55 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 95,000-85,000 strike for the Dec. 31 silver expiry.
The MCX Bulldex, an index that tracks the real-time performance of gold and silver futures on the MCX, was up 177 points at 18781 points. As of 1800 IST, the December and February gold contracts recorded turnovers of INR 23.97 billion and INR 1.91 billion, respectively, on the MCX. The December and March silver contracts saw turnovers of INR 17.20 billion and INR 1.67 billion, respectively.
The spot gold-silver ratio, also known as the Mint ratio, rose to 86.97, indicating that silver had underperformed gold. The ratio measures the ounces of silver required to buy an ounce of gold. The ratio was 86.19 on Tuesday.
Outlook for the rest of the session:
--MCX gold seen at INR 75,300–76,380 per 10 gm
--COMEX gold seen at $2,622.0–$2,680.0 an ounce
--MCX silver seen at INR 88,100-89,400 per kg
--COMEX silver seen at $30.20-$31.10 an ounce
End
US$1 = INR 84.45
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Saji George Titus
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