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Informist, Thursday, Dec. 19, 2024

By Sandeep Sinha

MUMBAI – Futures contracts of gold rose on the Multi Commodity Exchange of India and COMEX because of short-covering after six days of fall. The positive sentiment in the yellow metal was further aided by weakness in the dollar, which makes dollar-denominated commodities cheaper for those holding other currencies, thus improving demand.

At 1910 IST, the Dollar Index, which measures the strength of the greenback against a basket of six major currencies, was down 0.5% at 107.89 due to profit-taking.

"Gold witnessed minor buying as the $2,600 an ounce level on COMEX acted as temporary support, alongside INR 75,500 per 10 grams in the domestic MCX market. The momentum remains volatile due to uncertainties surrounding the interest rate cycle," Jateen Trivedi, vice-president and research analyst at LKP Securities, said in a note.

At 1902 IST, the most active February GOLD contract on the MCX was up 0.3% at INR 75,878 per 10 grams. The most active February contract on COMEX was 0.5% higher at $2,620.50 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 73,000 strike for the Dec. 31 contract.

However, the outflow in gold exchange-traded funds restricted further upside in yellow metal. On Thursday, gold holdings with the SPDR Gold Trust, the world's largest gold-backed ETF, fell by 3.16 tonnes to 860.74 tonnes. The fund has a market value of $71.73 billion. On the National Stock Exchange, the total value of gold ETFs traded on Friday was INR 1.02 billion, down from INR 1.17 billion on Thursday. 

Although the Federal Reserve decided to lower rates, its projections indicated fewer rate cuts going forward, which has maintained pressure on gold prices for the past two days. In the near term, gold prices are expected to trade within a range of INR 74,500-INR 76,500 per 10 gm, Trivedi said.

SILVER prices were little changed, taking cues from COMEX, as strength in gold was offset by weakness in industrial metals. At 1908 IST, the most active March contract of silver on the MCX was steady at INR 87,172 per kg. The same-month contract on COMEX was flat at $29.39 per ounce.

On the options front, the highest call open interest was at the INR 95000-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 up 22 points at 18370 points. As of 1910 IST, the February and April gold contracts recorded turnovers of INR 21.07 billion and INR 1.14 billion, respectively. The March and May silver contracts saw turnovers of INR 16.49 billion and INR 1.05 billion, respectively.

The spot gold-silver ratio, also known as the Mint ratio, rose to 90.09 on Friday, indicating that gold had outperformed silver. The ratio measures the ounces of silver required to buy an ounce of gold. The ratio was 88.84 on Thursday.

Outlook for the rest of the session:

--MCX gold seen at INR 75,292–INR 76,030 per 10 gm

--COMEX gold seen at $2,581.0–$2,630.0 an ounce

--MCX silver seen at INR 86,050-INR 87,430 per kg

--COMEX silver seen at $29.10-$29.65 an ounce

End

US$1 = INR 85.01

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

Edited by Rajeev Pai

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