India Bullion
Up on safe-haven demand, purchases by Chinese central bank
This story was originally published at 19:34 IST on 9 December 2024
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By Sandeep Sinha
MUMBAI – Futures contracts of GOLD rose on the Multi Commodity Exchange of India and on the COMEX as geopolitical turmoil in Syria boosted the safe-haven demand for bullion. The positive cue in yellow metal was also supported by the resumption of gold purchases by the Chinese central bank, weakness in the dollar, and money managers increasing their net long positions in COMEX for the second successive week.
The People's Bank of China bought 4.98 tonnes of gold in November, the first purchase since April. Gold reserves with the Chinese central bank climbed to 2,269.28 tonnes as of November-end, the central bank data showed on Saturday.
Money managers increased their net long position in COMEX gold by 3,206 lots to 201,397 as of Dec. 3, the second straight week of growth indicating bullish momentum for the yellow metal, according to Commodity Futures Trading Commission data.
At 1740 IST, the dollar index, which measures the strength of the greenback against a basket of major currencies, was down 0.1% at 105.92. A weaker greenback makes dollar-denominated precious commodities cheaper for those holding other currencies, thus improving demand.
"Gold prices surged to INR 77,200 on MCX, gaining over INR 500, as geopolitical turmoil reignited safe-haven demand," Jateen Trivedi, vice-president and research analyst at LKP Securities, said, citing the ouster of Syrian President Bashar al-Assad and political troubles of South Korean President Yoon Suk Yeol. "These developments shifted gold's range higher to INR 76,500–INR 78,000, with safe-haven demand likely to remain elevated in the near term."
At 1750 IST, the most-active February contract of GOLD on the MCX was up 0.9% at INR 77,268 per 10 grams. The most-active February contract on COMEX was up 0.7% at $2,678.4 per ounce. The highest call open interest was at INR 78,000-79,000 strike prices, suggesting a bullish view on gold. The highest put open interest was at INR 76,000-74,000 strikes for the Dec. 31 gold contract.
"The fundamental bias for gold and silver remains cautiously bullish, with safe-haven demand and Fed policy expectations underpinning their appeal," Reliance Securities said in a report.
On Friday, gold holdings with SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, remained steady at 871.94 tonnes. The fund has a market value of $73.90 billion. On the National Stock Exchange, the total value of gold ETFs traded on Monday was INR 888.9 million, up from INR 757.2 million on Friday.
SILVER prices rose, taking cues from COMEX and positive trends in gold and industrial metals. At 1750 IST, the most-active March contract of silver on the MCX was up 1.8% at INR 94,066 per kg. The same-month contract on COMEX was 2% higher at $31.92 per ounce.
On the options front, the highest call open interest was at INR 95,000-INR 100,000 strike price. The highest put open interest was at INR 85,000 strike for the Feb. 24 expiry.
The MCX Bulldex, an index that tracks the real-time performance of gold and silver futures on the MCX, was up 122 points at 18948 points. At 1753 IST, the February and April gold contracts recorded turnovers of INR 31.43 billion and INR 4.31 billion, respectively, on the MCX. The March and May silver contracts saw turnovers of INR 29.65 billion and INR 1.06 billion, respectively.
The spot gold-silver ratio, also known as the Mint ratio, fell to 83.96 on Monday, indicating that silver had outperformed gold. The ratio measures the ounces of silver required to buy an ounce of gold. The ratio was 85.01 on Friday.
Outlook for the rest of the session:
--MCX gold seen at INR 76,400–77,500 per 10 gm
--COMEX gold seen at $2,638.0–$2,702.30 an ounce
--MCX silver seen at INR 93,200-94,700 per kg
--COMEX silver seen at $31.60-$32.20 an ounce
End
US$1 = INR 84.73
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Saji George Titus
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