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Informist, Wednesday, Jan. 22, 2025

By Sandeep Sinha

MUMBAI – Futures contracts of gold rose on the Multi Commodity Exchange of India and the COMEX Wednesday because of weakness in the dollar and a fall in US 10-year Treasury yield. Positive movement in the yellow metal was also boosted by safe-haven demand fuelled by uncertainty around US President Donald Trump's policies.

At 1623 IST, the dollar index, which measures the strength of the greenback against a basket of major currencies, was down 0.3% at 107.79. A weaker greenback makes dollar-denominated commodities cheaper for those holding other currencies, thus improving demand.

In the US, the 10-year Treasury yield was down by 4 basis points to 4.57% after US President Donald Trump signed a slew of orders shortly after taking oath.

Investors will also watch out for the US Federal Reserve's interest rate decision after its Jan. 28-29 meet. Expectations of lower interest rates increase the appeal of non-yielding assets such as gold.

At 1635 IST, the most-active February GOLD contract on the MCX was up 0.4% at INR 79,488 per 10 grams. The most-active February contract on the COMEX was up 0.4% at $2,770 per ounce. The highest call open interest for gold was at INR 80,000 strike prices, suggesting a bullish view. The highest put open interest was at INR 78,000-INR 77,000 strikes for the Jan. 27 contract.

The upside in the precious metal was capped by sharp outflows in gold exchange-traded funds. On Tuesday, gold holdings with SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell by 7.46 tonnes to 871.66 tonnes. The fund has a market value of $76.71 billion. On the National Stock Exchange, the total value of gold ETFs traded Wednesday was INR 1.55 billion, up from INR 941.4 million Tuesday.

SILVER contracts traded higher taking cues from COMEX and a firm trend in gold. At 1635 IST, the most-active March contract on the MCX was up 0.1% at INR 92,222 per kilogram. The same-month contract on the COMEX was up 0.2% at $31.56 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 real-time performance of gold and silver futures on the MCX, was up 93 points at 19335. Until 1640 IST, the February and April gold contracts recorded turnover of INR 21.43 billion and INR 9.96 billion, respectively. The March and May silver contracts saw turnovers of INR 9.10 billion and INR 625.1 million, respectively.

The spot gold-silver ratio, also known as the Mint ratio, rose marginally to 89.33 on Wednesday, indicating that gold had outperformed silver. The ratio was at 89.3 on Tuesday. The ratio measures the ounces of silver required to buy an ounce of gold.

Outlook for the rest of the session:

--MCX gold seen at INR 79,110–INR 79,918 per 10 gm

--COMEX gold seen at $2,745.43–$2,791.80 an ounce

--MCX silver seen at INR 91,960-INR 92,890 per kg

--COMEX silver seen at $31.30-$31.83 an ounce

End

US$1 = INR 86.32

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

Edited by Nishant Maher

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