India Bullion
Gold prices up on safe-haven demand; US CPI eyed
This story was originally published at 18:27 IST on 11 December 2024
Register to read our real-time news.Informist, Wednesday, Dec. 11, 2024
By Sandeep Sinha
MUMBAI – Futures contracts of gold rose on the Multi Commodity Exchange of India and the COMEX due to safe-haven demand in the wake of Israel launching air strikes on Syrian military sites following the ouster of Bashar al-Assad's government. However, further upside in the yellow metal was limited due to persistent strength in the dollar, which makes commodities priced in the greenback expensive for holders of other currencies.
At 1725 IST, the dollar index, which measures the strength in the greenback against a basket of major currencies, was up 0.3% at 106.69.
"Gold prices have been greatly impacted by the recent escalation (in tension) in West Asia, especially with regard to Syrian rebels and broader regional conflicts. Geopolitical unrest frequently helps gold since it is a safe-haven investment," said Prithviraj Kothari, managing director of RiddiSiddhi Bullions.
At 1725 IST, the most-active February contract of gold on the MCX was up 0.1% at INR 78,400 per 10 grams. The most-active February contract on COMEX was up 0.4% at $2,728.0 per ounce. The highest call open interest was at INR 79,000-80,000 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.
Kothari said currency fluctuations, interest rate regimes, and worldwide economic conditions are just a few of the many variables that affect gold prices. "The general mood of the market and how these other elements interact will determine how the Syrian war affects gold prices. Syria's condition is extremely unstable and changing. The way the dispute develops and how it impacts larger international markets will determine the real effect on gold prices".
"Gold is expected to correct a bit lower before the US consumer price index report as traders turn cautious," said Praveen Singh, associate vice-president, fundamental currencies and commodities, at Mirae Asset Sharekhan, in an email note. However, he suggests buying on dips is the preferred strategy for a possible target of $2,722-$2,750 in the coming days.
On Tuesday, GOLD holdings with the SPDR Gold Trust, the world's largest gold-backed ETF, remained steady at 870.79 tonnes. The fund has a market value of $75.29 billion. On the National Stock Exchange, the total value of gold ETFs traded on Wednesday was INR 1.42 billion, up from INR 1.17 billion on Tuesday.
SILVER prices fell, taking cues from COMEX, and weakness in industrial metals. At 1735 IST, the most-active March contract of silver on the MCX was down 0.5% at INR 95,087 per kg. The same-month contract on COMEX was 0.5% lower at $32.58 per ounce.
On the options front, the highest call open interest was at INR 100,000 strike price. The highest put open interest was at INR 90,000 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 down 16 points at 19225 points. At 1740 IST, the February and April gold contracts recorded turnovers of INR 65.63 billion and INR 3.94 billion, respectively, on the MCX. The March and May silver contracts saw turnovers of INR 24.29 billion and INR 729.6 million, respectively.
The spot gold-silver ratio, also known as the Mint ratio, rose to 85.06 on Wednesday, indicating that gold had outperformed silver. The ratio measures the ounces of silver required to buy an ounce of gold. The ratio was 83.81 on Tuesday.
Outlook for the rest of the session:
--MCX gold seen at INR 77,720–78,990 per 10 gm
--COMEX gold seen at $2,795.0–$2,705.06 an ounce
--MCX silver seen at INR 94,760-96,030 per kg
--COMEX silver seen at $32.37-$32.86 an ounce
End
US$1 = INR 84.83
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Akul Nishant Akhoury
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