India Bullion
Gold prices up on short-covering, firm dollar caps upside
This story was originally published at 18:19 IST on 16 December 2024
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By Sandeep Sinha
MUMBAI – Futures contracts of gold on the Multi Commodity Exchange of India and COMEX rose because of short-covering after two days of decline. The positive sentiment was further aided by slightly better than expected services purchasing managers' index readings in Germany and France.
France's services PMI print rose to 48.2 in December from 46.9 in November, and Germany's flash services PMI reading rose to 51 in December from 49.3 in November, according to a report published by S&P Global and the Hamburg Commercial Bank.
"Gold prices are likely to trade steady and may see some consolidation as focus turns on the key central bank policy meeting outcome starting with the US Federal Reserve on Wednesday, followed by Bank of Japan and Bank of England on Thursday, and the People's Bank of China on Friday," Pranav Mer, vice-president-research, commodity and currency, at JM Financial, said in a note.
At 1750 IST, the most-active February gold contract on the MCX was up 0.3% at INR 77,372 per 10 grammes. The most-active February contract on COMEX was 0.2% higher at $2,682.20 per ounce. The highest call open interest for gold was at the INR 79,000-INR 80,000 strike prices, suggesting a bullish view. The highest put open interest was at the INR 75,000-INR 74,000 strike for the Dec. 31 contract.
However, further upside in the yellow metal was prevented by outflows from gold exchange-traded funds and continued strength in the dollar, which makes commodities priced in the greenback expensive for holders of other currencies.
On Friday, GOLD holdings with SPDR Gold Trust, the world's largest gold-backed ETF, fell by 4.90 tonnes to 863.90 tonnes. The fund has a market value of $73.84 billion. On the National Stock Exchange, the total value of gold ETFs traded on Monday was INR 823.1 million, down from INR 1.19 billion on Friday.
"The bias in very short term remains slightly bearish on elevated US yields and healthy risk appetite as Bitcoin has hit a fresh record high above $106,000," Praveen Singh, associate vice-president, fundamental currencies and commodities, at Mirae Asset Sharekhan, said. Gold prices may correct further and test the support zone of $2,620-$2,630 an ounce, while resistance is seen at $2,670-$2,685 an ounce, Singh said.
SILVER prices rose, taking cues from COMEX and strength in gold. At 1800 IST, the most-active March contract of silver on the MCX was up 0.4% at INR 91,315 per kg. The same-month contract on COMEX was 0.4% higher at $31.15 per ounce.
On the options front, the highest call open interest was at the INR 100,000 strike price. The highest put open interest was at INR 90,000 strike for the Feb. 24 expiry contract.
The MCX Bulldex, an index that tracks the real-time performance of gold and silver futures on the MCX, was up 26 points at 18845 points. As of 1800 IST, the February and April gold contracts recorded turnovers of INR 23.24 billion and INR 1.27 billion, respectively. The March and May silver contracts saw turnovers of INR 10.09 billion and INR 437.53 million, respectively.
The spot gold-silver ratio, also known as the Mint ratio, rose to 86.85 on Monday, indicating that gold outperformed silver. The ratio measures the ounces of silver required to buy an ounce of gold. The ratio was 86.64 on Friday.
Outlook for the rest of the session:
--MCX gold seen at INR 76,856–77,715 per 10 gm
--COMEX gold seen at $2,660.0–$2,695.0 an ounce
--MCX silver seen at INR 90,500-92,020 per kg
--COMEX silver seen at $30.80-$31.40 an ounce
End
US$1 = INR 84.86
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Avishek Dutta
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