India Bullion
Gold prices down on profit-booking; weak dollar limits fall
This story was originally published at 17:22 IST on 20 January 2025
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By Sandeep Sinha
MUMBAI – Futures contracts of gold fell on the Multi Commodity Exchange of India and COMEX on Monday, as investors continued to book profits at higher levels. Sentiment was also weighed down after the Reserve Bank of India halted gold purchases after 11 months of successive buying.
However, the fall in the precious metal price was limited due to sharp inflows in gold exchange-traded funds and weakness in the dollar, which makes dollar-denominated precious commodities cheaper for those holding other currencies. At 1645 IST, the dollar index, which measures the strength of the greenback against a basket of major currencies, was down 0.3% at 109.07.
On Friday, bullion prices hit a one-month high of $2,759.20 an ounce. So far this month, gold prices have risen 4% on the COMEX as political and economic uncertainties boosted safe-haven demand. Investors are waiting for inauguration of Donald Trump as the US president, as he has promised multiple executive orders after being sworn in. Investors will take cues from his policy announcement, which may have a bearing on gold prices.
Trade volume on the COMEX is likely to be on the lower side as markets are closed Monday on account of Martin Luther King Jr. Day. Electronic trading in commodities will remain open.
At 1625 IST, the most-active February GOLD contract on the MCX fell 0.1% to INR 78,926 per 10 grams. The most-active February contract on the COMEX was 0.1% lower at $2,745.30 per ounce. The highest call open interest for gold was at INR 80,000-INR 81,000 strike prices, suggesting a bullish view. The highest put open interest was at the INR 77,000-INR 76,000 strikes for the Jan. 27 contract.
"Huge volatility is expected in the wake of the inaugural speech of the incoming US President," Praveen Singh, associate vice-president, fundamental currencies and commodities, Mirae Asset Sharekhan, said in a note. "Gold is more likely to fall than rise as the US economy is doing well and a minor miss in the US CPI data won't make any difference in the Fed's monetary policy stance," Singh said.
On Friday, gold holdings with SPDR Gold Trust, the world's largest gold-backed exchange traded fund, rose by 10.34 tonnes to 879.12 tonnes, the biggest single-day gain since Dec. 20. The fund has a market value of $76.70 billion. On the National Stock Exchange, the total value of gold ETFs traded Monday was INR 1.22 billion, up from INR 1.03 billion Friday.
SILVER contracts also traded lower taking cues from COMEX and weakness in gold. At 1630 IST, the most-active March contract on the MCX was down 0.2% at INR 91,380 per kilogram. The same-month contract on the COMEX was 0.2% lower at $31.07 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 159 points at 19,171. Until 1632 IST, the February and April gold contracts recorded a turnover of INR 17.09 billion and INR 8.71 billion, respectively. The March and May silver contracts saw a turnover of INR 8.36 billion and INR 429.83 million, respectively.
The spot gold-silver ratio, also known as the Mint ratio, rose to 89.53 on Monday, indicating that gold had outperformed silver. The ratio measures the ounces of silver required to buy an ounce of gold. The ratio was 89.05 on Friday.
Outlook for the rest of the session:
--MCX gold seen at INR 78,554–INR 79,226 per 10 gm
--COMEX gold seen at $2,726.40–$2,756.40 an ounce
--MCX silver seen at INR 90,970-INR 91,800 per kg
--COMEX silver seen at $30.76-$31.48 an ounce
End
US$1 = INR 86.57
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Nishant Maher
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