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Informist, Monday, Jan. 6, 2025

MUMBAI – Futures contracts of gold fell on the Multi Commodity Exchange of India and the COMEX on Monday because of hawkish comments by US Federal Reserve officials. Sentiment for the precious metal was also weighed down by outflow in from gold exchange-traded funds.

Federal Reserve Bank of San Francisco President Mary Daly and Governor Adriana Kugler on Saturday reiterated the Fed's commitment to combating inflation and achieving the 2% target, signalling a more cautious approach to interest rate cuts in 2025. "The Fed's recent shift towards a more measured pace of rate cuts, as indicated by Chair Powell, may pose a headwind for gold, particularly after its significant 27% surge in 2024," Kotak Securities said in a report.

On Friday, gold holdings with SPDR Gold Trust, the world's largest gold-backed ETF, fell by 1.44 tonnes to 871.08 tonnes. The fund has a market value of $74.09 billion. On the National Stock Exchange, the total value of gold ETFs traded on Monday was INR 1.13 billion.

At 1620 IST, the most-active February GOLD contract on the MCX was down 0.2% at INR 77,129 per 10 grams. The most-active February contract on the COMEX was 0.4% lower at $2,645.10 per ounce. The highest call open interest for gold was at INR 78,000-INR 80,000 strike prices, suggesting a bullish view. The highest put open interest was at the INR 74,000 strike for the Jan. 27 contract.

"Gold is expected to trade range-bound ahead of the US Automatic Data Processing employment report, Institute for Supply Management services and December nonfarm payroll reports to be released later this week," associate vice-president, fundamental currencies and commodities, at Mirae Asset Sharekhan said in a note.

However, the fall of the yellow metal was cushioned by weakness in the dollar, which makes commodities priced in the greenback cheaper for holders of other currencies. At 1620 IST, the dollar index, which measures the strength of the greenback against a basket of major currencies, was down 0.3% at 108.62 due to profit-taking.

SILVER contracts traded higher taking cues from COMEX because of weakness in the dollar. At 1627 IST, the most-active March contract on the MCX was up 0.5% at INR 89,707 per kg. The same-month contract on the COMEX was up 0.6% at $30.23 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 down 64 points at 18739 points. Until 1630 IST, the February and April gold contracts recorded turnovers of INR 23.51 billion and INR 4.75 billion, respectively. The March and May silver contracts saw turnovers of INR 12.94 billion and INR 677.79 million, respectively.

The spot gold-silver ratio, also known as the Mint ratio, fell to 88.46 on Friday, indicating that gold had underperformed silver. The ratio measures the ounces of silver required to buy an ounce of gold. The ratio was 89.14 on Friday.

Outlook for the rest of the session:

--MCX gold seen at INR 76,820–INR 77,760 per 10 gm

--COMEX gold seen at $2,641.30–$2,672.60 an ounce

--MCX silver seen at INR 88,780-INR 90,450 per kg

--COMEX silver seen at $29.90-$30.58 an ounce

End

US$1 = INR 85.83

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

Edited by Ashish Shirke

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