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Informist, Monday, Jan. 27, 2025

By Ashutosh Pati

MUMBAI – Futures contracts of gold on the Multi Commodity Exchange of India and COMEX edged lower Monday as market participants expect the US Federal Reserve to keep interest rates unchanged at its meeting on Tuesday and Wednesday. Typically, gold has an inverse relationship with interest rates, with high rates damping demand for the non-interest-bearing yellow-metal.

At 1520 IST, the most-active February GOLD contract on the MCX was down 0.1% at INR 79,951 per 10 grams. The most-active February contract on COMEX was 0.4% lower at $2,767.5 per ounce.

However, the downside in gold prices on the COMEX was limited due to a weaker dollar, which makes commodities priced in the greenback cheaper for buyers holding other currencies, aiding demand. At 1531 IST, the Dollar Index, which measures the strength of the dollar against a basket of six major currencies, was down 0.2% at 107.42.

A weaker rupee against the dollar limited the downside in gold prices on the MCX. The rupee fell 0.2% against the dollar and closed at 86.34 as banks bought the greenback on behalf of foreign portfolio investors and importers. A weaker domestic currency makes dollar-denominated commodities expensive for domestic buyers.

For further cues, investors await new-home sales data from the US later in the day.

Silver contracts traded lower, taking cues from COMEX and a downward trend in industrial metals. At 1531 IST, the most-active March SILVER contract on the MCX was down 0.7% at INR 90,957 per kg. The same-month contract on COMEX was down 1.2% at $30.82 per ounce.

Outlook for the rest of the session:

--MCX gold seen at INR 79,401–INR 80,625 per 10 gm

--COMEX gold seen at $2,744–$2,812 an ounce

--MCX silver seen at INR 90,641-INR 93,117 per kg

--COMEX silver seen at $30.60-$31.77 an ounce

End

US$1 = INR 86.34

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

Edited by Avishek Dutta

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