More Stories

Informist, Tuesday, Dec. 17, 2024

By Sandeep Sinha

MUMBAI – Futures contracts of gold on the Multi Commodity Exchange of India and the COMEX fell Tuesday due to a recovery in the dollar ahead of the outcome of the US Federal Reserve's policy meeting early on Thursday. Sentiment towards the yellow metal was also dampened by a sharp rise in US 10-year bond yields, which increases the opportunity cost of holding gold.

At 1836 IST, the Dollar Index, which measures the strength of the greenback against a basket of major currencies, was up 0.1% at 106.95 on stronger than expected US economic data. A stronger greenback makes dollar-denominated precious commodities more expensive for those holding other currencies, dulling demand.

The US Composite Purchasing Managers' index, which tracks the manufacturing and services sectors, rose to 56.6 in December from 54.9 in November, according to data released by S&P Global on Monday. The US 10-year bond yield traded 0.8% higher at 4.43% on expectations of less aggressive interest rate cuts by the Federal Reserve.

The Federal Open Market Committee is widely expected to reduce interest rates by 25 basis points to 4.25-4.50%. Investors will also watch out for the policy decisions of Bank of Japan and Bank of England for further cues.

"Gold prices weakened by $12 an ounce on COMEX and dropped INR 325 per 10 gm on MCX as the outcome of the Fed's policy meeting prompted caution among market participants. Long positions were trimmed ahead of the year's final policy announcement, with expectations that forward guidance on rate cuts may remain unclear," Jateen Trivedi, vice-president and research analyst at LKP Securities, said in a note. This lack of clarity weighed on sentiment, especially as the dollar index continued its upward momentum, he said.

At 1837 IST, the most-active February gold contract on the MCX was down 0.3% at INR 76,845 per 10 grammes. The most-active February contract on COMEX was 0.3% lower at $2,661.50 per ounce. The highest call open interest for gold was at the INR 78,000-INR 79,000 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, fresh inflows in gold exchange-traded funds cushioned the downside in gold. On Monday, GOLD holdings with SPDR Gold Trust, the world's largest gold-backed ETF, rose by 290 kg to 864.19 tonnes. The fund has a market value of $73.73 billion. On the National Stock Exchange, the total value of gold ETFs traded on Tuesday was INR 1.14 billion, up from INR 823.1 million on Monday.

SILVER prices fell, taking cues from COMEX, and weakness in gold and industrial metals. At 1838 IST, the most-active March contract of silver on the MCX was down 0.8% at INR 90,471 per kg. The same-month contract on COMEX was 0.8% lower at $30.79 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-INR 85,000 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 down 147 points at 18700 points. As of 1840 IST, the February and April gold contracts recorded turnovers of INR 33.44 billion and INR 1.21 billion, respectively. The March and May silver contracts saw turnovers of INR 15.88 billion and INR 941.54 million, respectively.

The spot gold-silver ratio, also known as the Mint ratio, rose to 87.21 on Tuesday, indicating that gold outperformed silver. The ratio measures the ounces of silver required to buy an ounce of gold. The ratio was 86.78 on Monday.

Outlook for the rest of the session:

--MCX gold seen at INR 76,350–77,340 per 10 gm

--COMEX gold seen at $2,638.0–$2,680.0 an ounce

--MCX silver seen at INR 89,950-91,586 per kg

--COMEX silver seen at $30.60-$31.20 an ounce

End

US$1 = INR 84.90

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Avishek Dutta

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (22) 6985-4000 

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2024. All rights reserved.