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Informist, Monday, Feb. 3, 2025

By Sandeep Sinha

MUMBAI – Futures contracts of gold rose on the Multi Commodity Exchange of India Monday because of a sharp depreciation in the rupee, while contracts on COMEX were steady. The positive sentiment was aided by safe-haven demand and inflows in gold exchange-traded funds.

The rupee declined 0.7% to end at a new all-time low of 87.19 against the dollar because of selling by foreign funds and expectations of an interest rate cut by the Reserve Bank of India Friday. A weaker rupee makes dollar-denominated commodities more expensive for domestic buyers.

Additionally, bullion prices are likely to have risen after US President Donald Trump signed an executive order imposing 25% tariff on imports from Canada and Mexico and 10% on goods imported from China, leading to fears of a trade war that may lower global economic growth and boost bullion's safe-haven appeal. "Uncertainty surrounding global trade policies will keep gold prices elevated in near term," ICICI Securities said in a note.

At 1821 IST, the most-active April GOLD contract on the MCX was up 1% at INR 83,109 per 10 grams. The most-active April gold contract on COMEX was steady at $2,844.81 per ounce. The highest call open interest was at INR 84,000 strike price, indicating a bullish view. The highest put open interest was at INR 80,000 strike for the Feb. 28 contract.

Meanwhile, gold holdings with the SPDR Gold Trust, the world's largest gold-backed ETF, Friday rose 0.58 tonne to 864.77 tonnes. The fund has a market value of $78.16 billion. On the National Stock Exchange, the total value of gold ETFs traded Monday was INR 2.05 billion, down from INR 2.18 billion Friday.

Market participants now look forward to the release of the US final Manufacturing Purchasing Managers' Index and the Institute of Supply Management Manufacturing Purchasing Managers' Index, due later Monday, for further cues. They will also watch out for a speech by US Federal Open Market Committee member Raphael Bostic later in the day.

SILVER contracts traded higher on the MCX, despite negative cues from COMEX, due to a positive trend in gold and weakness in the rupee. At 1821 IST, the most-active March contract on the MCX was up 0.9% at INR 93,994 per kg. The same-month contract on COMEX was up 0.1% at $32.31 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, was up 95 points at 19840 points. As of 1821 IST, the April and June gold contracts recorded turnovers of INR 47.54 billion and INR 2.98 billion, respectively. The March and May silver contracts saw turnovers of INR 26.92 billion and INR 1.79 billion, respectively.

The spot gold-silver ratio, also known as the Mint ratio, rose to 89.62 Monday, indicating that gold had outperformed silver. The ratio measures the ounces of silver required to buy an ounce of gold. The ratio was at 89.34 on Friday.

Outlook for the rest of the session:

--MCX gold seen at INR 82,200–INR 83,300 per 10 gm

--COMEX gold seen at $2,818.0–$2,852.0 an ounce

--MCX silver seen at INR 92,500-INR 94,300 per kg

--COMEX silver seen at $31.70-$32.80 an ounce

End

US$1 = INR 87.19

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

Edited by Nishant Maher

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