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Informist, Wednesday, Feb. 5, 2025

By Sandeep Sinha

MUMBAI – Gold contracts on the Multi Commodity Exchange of India and COMEX touched new lifetime highs on Wednesday because of rising trade tensions between the US and China, and geopolitical concerns over Gaza Strips boosted the appeal for safe-haven assets. The positive movement in yellow metal was also lifted by weakness in the dollar.

On Tuesday, China announced retaliatory tariffs against imports from the US, as the latter imposed 10% tariffs on Chinese goods. The ongoing tiff between the world's largest and second-largest economies raised concerns about a global economic slowdown.

"Gold prices have soared to an all-time high due to the global uncertainty sparked by the tariff war initiated by Trump and followed by China. This ongoing uncertainty is expected to drive gold prices towards greater volatility, as any instability in the global economy tends to push gold prices even higher," Avinash Gupta, vice-chairman, All India Gem and Jewellery Domestic Council, said.

At 1830 IST, the dollar index, which measures the strength of the greenback against a basket of major currencies, was down 0.5% at 107.47 because of a slowdown in the jobs market. A weaker greenback makes dollar-denominated precious commodities cheaper for those holding other currencies, thus improving demand.

US Bureau of Labor Statistics Tuesday reported that jobs opening in the country fell to 7.6 million in December from 8.1 million in November. "There remains much unease about what lies ahead, which increases gold's appeal as a store of value amid uncertain times," Daniel Hynes, senior commodity strategist at ANZ Research, said in a note.

At 1830 IST, the most active April GOLD contract on the MCX was up 1% at INR 84,662 per 10 grams, after hitting fresh lifetime high of INR 84,767 per 10 gm. The most active April gold contract on COMEX was up 0.6% at $2,893.70 per ounce. The contract hit a new lifetime high of $2,901.5 per ounce earlier Wednesday. The highest call open interest was at INR 86,000-INR 87,000 strike prices, indicating a bullish view. The highest put open interest was at INR 82,000-INR 80,000 strike for the Feb. 28 contract.

However, further upside in the bullion metal was limited due to outflow in gold exchange-traded funds. On Tuesday, gold holdings with the SPDR Gold Trust, the world's largest gold-backed ETF, fell by 2.72 tonnes to 863.05 tonnes. The fund has a market value of $78.87 billion. On the National Stock Exchange, the total value of gold ETFs traded Wednesday was INR 3.20 billion, up from INR 1.87 billion on Tuesday.

SILVER contracts traded higher, taking firm trend from gold, despite steady cues on COMEX. At 1830 IST, the most-active March contract on the MCX was up 0.5% at INR 96,169 per kilogram. The same-month contract on the COMEX was flat at $33.03 per ounce. On the options front, the highest call open interest was at the INR 100,000-INR 105,000 strike prices. 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 177 points at 20280 points. The April and June gold contracts recorded turnovers of INR 44.61 billion and INR 3.32 billion, respectively. The March and May silver contracts saw turnovers of INR 25.43 billion and INR 3.37 billion, respectively.

The spot gold-silver ratio, also known as the Mint ratio, fell to 88.61 on Wednesday, indicating that gold underperformed silver. The ratio measures the ounces of silver required to buy an ounce of gold. The ratio was at 89.04 on Tuesday.

Outlook for the rest of the session:

--MCX gold seen at INR 84,095–INR 85,092 per 10 gm

--COMEX gold seen at $2,862.90–$2,928.10 an ounce

--MCX silver seen at INR 95,625-INR 97,327 per kg

--COMEX silver seen at $32.34-$33.31 an ounce

End

US$1 = INR 87.47

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

Edited by Deepshikha Bhardwaj

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