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Informist, Thursday, Feb. 6, 2025

By Sandeep Sinha

MUMBAI – Futures contracts of gold rose on the Multi Commodity Exchange of India on Monday because of weakness in the rupee, while contracts on COMEX fell due to profit-booking. The positive sentiment was further supported by interest rate cuts by the Bank of England, safe-haven demand, and fresh inflows in gold exchange-traded funds.

The rupee fell 0.1% against the dollar and closed at a new lifetime low of 87.58 because of selling by foreign funds and importers' purchase of the greenback. A weaker rupee makes dollar-denominated commodities expensive for domestic buyers.

The Bank of England today raised interest rates by 25 basis points to 4.50% by a majority of 7 to 2 votes. The cut in interest rates increases the appeal of non-interest-bearing assets such as gold.

US President Donald Trump's comments regarding Gaza and Iran, along with an anticipated plan to address the Russia-Ukraine conflict, fuelled safe-haven buying, Kotak Securities said in a note. "Concerns about the US-China trade war and potential additional tariffs further bolstered gold's appeal," the brokerage firm said.

On Wednesday, gold holdings with the SPDR Gold Trust, the world's largest gold-backed ETF, rose by 1.14 tonnes to 864.19 tonnes. The fund has a market value of $79.74 billion. On the National Stock Exchange, the total value of gold ETFs traded on Thursday was INR 3.60 billion, up from INR 3.20 billion on Wednesday.

At 1816 IST, the most active April GOLD contract on the MCX was up 0.2% at INR 84,722 per 10 grams. The most active April gold contract on COMEX was down 0.1% at $2,890.20 per ounce. The highest call open interest was at INR 85,000-INR 86,000 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.

For further cues, investors will now shift their focus towards data on US initial jobless claims later in the day. They will also watch US January non-farm payrolls scheduled to be released on Friday.

SILVER contracts traded lower, taking cues from COMEX and a strong dollar. At 1816 IST, the most-active March contract on the MCX was down 0.5% at INR 95,453 per kilogram. The same-month contract on the COMEX was 1.1% lower at $32.63 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 on the MCX, was down 74 points at 20232 points. The April and June gold contracts recorded turnovers of INR 37.33 billion and INR 2.06 billion, respectively. The March and May silver contracts saw turnovers of INR 20.74 billion and INR 3.05 billion, respectively.

The spot gold-silver ratio, also known as the Mint ratio, rose to 89.38 on Thursday, indicating that gold outperformed silver. The ratio measures the ounces of silver required to buy an ounce of gold. The ratio was at 88.80 on Wednesday.

Outlook for the rest of the session:

--MCX gold seen at INR 84,135–INR 85,080 per 10 gm

--COMEX gold seen at $2,867.93–$2,922.87 an ounce

--MCX silver seen at INR 94,717-INR 95,989 per kg

--COMEX silver seen at $32.51-$33.10 an ounce

End

US$1 = INR 87.58

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

Edited by Akul Nishant Akhoury

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