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Informist, Tuesday, Jan. 21, 2025

By Sandeep Sinha

MUMBAI – Futures contracts of gold on the Multi Commodity Exchange of India rose on Tuesday because of a drop in the US 10-year bond yield, while contracts on the COMEX traded in the green. US President Donald Trump has threatened Mexico and Canada with 25% tariff from Feb. 1, which also gave a boost to safe-haven demand for gold.

The US 10-year Treasury yield fell to 4.59% as the Trump administration has not imposed broad-based tariffs. "The delayed tariff does not mean tariffs would be scrapped altogether, the relief rally in bonds may not hold for long, which makes gold vulnerable," Praveen Singh, associate vice-president, fundamental currencies and commodities, Mirae Asset Sharekhan, said in a note.

"The rise in gold price was driven by heightened trade uncertainty following Trump's announcement of raising tariffs on imports from Mexico and Canada. The move has triggered fears of retaliatory measures, adding to global trade tensions. Such developments have fueled safe-haven buying in gold as investors hedge against potential market disruptions," Jateen Trivedi, vice-president and research analyst at LKP Securities, said in a note.

At 1656 IST, the most-active February GOLD contract on the MCX was up 0.5% at INR 78,898 per 10 grams. The most-active February contract on the COMEX was 0.7% lower at $2,729.70 per ounce. The highest call open interest for gold was at INR 79,000-INR 80,000 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.

On Monday, gold holdings with SPDR Gold Trust, the world's largest gold-backed exchange traded fund, remained steady at 879.12 tonnes. The fund has a market value of $76.70 billion. On the National Stock Exchange, the total value of gold ETFs traded Tuesday was INR 941.4 million, down from INR 1.22 billion on Monday.

SILVER contracts rose as traders increased their bullish positions on MCX, despite weak cues from COMEX. At 1703 IST, the most-active March contract on the MCX was up 0.2% at INR 91,621 per kilogram. The same-month contract on the COMEX was down 0.2% at $31.09 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 up 55 points at 19150 points. Until 1705 IST, the February and April gold contracts recorded turnovers of INR 21.79 billion and INR 7.63 billion, respectively. The March and May silver contracts saw turnovers of INR 15.09 billion and INR 740.2 million, respectively.

The spot gold-silver ratio, also known as the Mint ratio, fell to 89.21 on Tuesday, indicating that gold underperformed silver. The ratio measures the ounces of silver required to buy an ounce of gold. The ratio was at 89.52 on Monday.

Outlook for the rest of the session:

--MCX gold seen at INR 78,120–INR 79,200 per 10 gm

--COMEX gold seen at $2,700.0–$2,750.0 an ounce

--MCX silver seen at INR 89,900-INR 92,100 per kg

--COMEX silver seen at $30.76-$31.49 an ounce

End

US$1 = INR 86.58

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

Edited by Avishek Dutta

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