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Informist, Tuesday, Dec. 31, 2024

By Sandeep Sinha

MUMBAI – Futures contracts of gold on the Multi Commodity Exchange of India traded in the green, tracking gains on the COMEX, because of weakness in the dollar. The yellow metal is on track to deliver positive returns for the third successive year in 2024, rising 25.6% on the COMEX and 21.1% on the MCX.

At 1445 IST, the dollar index, which measures the strength of the greenback against a basket of major currencies, was down 0.2% at 106.33. A weaker greenback makes dollar-denominated precious commodities cheaper for those holding other currencies, thus improving demand.

"Gold has seen a stellar rally this year, delivering over 20% returns, which is higher than the benchmark indices such as the Nifty 50 and the S&P 500. This is the third consecutive year wherein gold has delivered returns in double digits. The yellow metal has provided nearly 10.5% compound annual growth in a decade," Colin Shah, managing director of Kama Jewelry, said in an email note.

The prolonged geopolitical tensions in West Asia and Ukraine boosted the long-term appeal of the yellow metal, Shah said, adding that the anticipation of rate cuts by the US Fed has added sheen to gold.

At 1450 IST, the most-active February GOLD contract on the MCX was up 0.3% at INR 76,506 per 10 grams. The most-active February contract on the COMEX was 0.3% higher at $2,626.40 per ounce. The highest call open interest for gold was at INR 77,000-INR 78,000 strike prices, suggesting a bullish view. The highest put open interest was at the INR 75,000 strike for the Dec. 31 contract.

"The movement in the dollar and US 10-year Treasury bond yields could influence gold prices Tuesday, although international markets will be shut on Jan 1 on account of the New Year Holiday, so volumes could be low," Reliance Securities said in a note.

On Monday, gold holdings with SPDR Gold Trust, the world's largest gold-backed ETF, remained steady at 872.52 tonnes. The fund has a market value of $73.17 billion.

SILVER prices were marginally higher, taking cues from COMEX, and gains in gold. At 1455 IST, the most-active March contract on the MCX was up 0.1% at INR 87,651 per kilogram. The same-month contract on the COMEX was up 0.1% at $29.43 per ounce.

The white metal has gained 17.8% on the MCX and 21% on the COMEX so far in 2024. 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 strikes 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 27 points at 18548 points. As of 1500 IST, the February and April gold contracts recorded turnovers of INR 14.88 billion and INR 694.29 million, respectively. The March and May silver contracts saw turnover of INR 6.94 billion and INR 489.19 million, respectively.

The spot gold-silver ratio, also known as the Mint ratio, rose to 90.27 on Monday, indicating that gold outperformed silver. The ratio measures the ounces of silver required to buy an ounce of gold. The ratio was 88.97 on Monday.

Outlook for the rest of the session:

--MCX gold seen at INR 75,930–76,700 per 10 gm

--COMEX gold seen at $2,605.40–$2,638.70 an ounce

--MCX silver seen at INR 86,666-88,798 per kg

--COMEX silver seen at $29.07-$29.89 an ounce

End

US$1 = INR 85.57

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

Edited by Saji George Titus

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