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Informist, Wednesday, Jan. 29, 2025

By Sandeep Sinha

MUMBAI – Futures contracts of gold on the Multi Commodity Exchange of India scaled fresh lifetime, taking cues from COMEX, as prospective tariffs imposed by US President Donald Trump boosted the metal's safe-haven demand. The positive cue in yellow metal was further aided by fresh inflows in gold exchange-traded funds and reports of an import duty hike in the Union Budget on Saturday.

"Investors are turning to gold as a safe-haven asset amid uncertainty over future trade policies. Additionally, Trump's call for lower interest rates and easing inflationary pressures in the US support expectations of potential Federal Reserve rate cuts, further boosting gold's appeal," said Ajay Kedia, director at Kedia Advisory. The equity market seems risky after the China's artificial intelligence company DeepSeek launched its open-source AI model, Janus-Pro-7B, which also supported gold, he said.

At 1732 IST, the most-active April gold contract on the MCX was up 0.6% at INR 81,391 per 10 grams, after hitting an all-time high of INR 81,439. The most-active April gold contract on COMEX was up 0.8% at $2,816.60 per ounce. The highest call open interest was at INR 81,000-INR 83,000 strike prices, suggesting a bullish view. The highest put open interest was at INR 79,000-INR 78,000 strikes for the Feb. 28 contract.

The price of 24-carat gold in the spot market in Mumbai hit a lifetime high of INR 81,303 per 10 grams, plus 3% goods and services tax. The price of 22-carat gold was INR 74,474 rupees per 10 grams, and that of 18-carat gold was at INR 60,977 rupees per 10 grams.

"Amid concerns about tariffs and a desire to protect against deficits, debt, and de-dollarisation, gold prices have crossed a record high of INR 80,000 on domestic markets and sustaining above it. Federal Reserve kept the interest rate steady at 4.25% to 4.50% in Jan. 29 meeting, and investors anticipate 50 basis points of easing through 2025, according to the CME FedWatch Tool, with the first-rate decrease occurring in June. Further upside momentum is expected to continue towards $2,800 an ounce (INR 81,000 per 10 gram) this week," said Renisha Chainani, research head, Augmont Goldtech Pvt. Ltd.

On Wednesday, gold holdings with SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose by 4.30 tonnes to 865.34 tonnes, the second straight day of inflows. The fund has a market value of $76.66 billion. On the National Stock Exchange, the total value of gold ETFs traded Thursday was INR 1.32 billion, up from INR 864 million on Wednesday.

For further cues, investors will now shift their focus on data on US GDP, weekly jobless claims, and pending home sales, due later on Thursday. They will also track the European Central Bank's policy meeting later in the day.

SILVER contracts traded higher taking cues from COMEX and a firm trend in gold and industrial metals. At 1805 IST, the most-active March contract on the MCX was up 1% at INR 92,819 per kilogram. The same-month contract on the COMEX was up 1.9% at $31.99 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 Silver Institute on Wednesday said that the global silver market is expected to record a deficit for the fifth consecutive year in 2025, which also aided the prices.

The MCX Bulldex, an index that tracks real-time performance of gold and silver futures on the MCX, was up 102 points at 19535. Until 1813 IST, the February and April gold contracts recorded turnover of INR 10.53 billion and INR 26.42 billion, respectively. The March and May silver contracts saw turnover of INR 17.12 billion and INR 1.19 billion, respectively.

The spot gold-silver ratio, also known as the Mint ratio, fell to 89.42 Thursday, indicating that gold had underperformed silver. On Wednesday, the ratio was at 90.26. 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 80,560–INR 81,617 per 10 gm

--COMEX gold seen at $2,794.60–$2,822.67an ounce

--MCX silver seen at INR 91,880-INR 93,418 per kg

--COMEX silver seen at $30.96-$32.38 an ounce

End

US$1 = INR 86.63

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

Edited by Akul Nishant Akhoury

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