India Bullion
Gold prices up on safe-haven appeal, weaker dollar
This story was originally published at 18:36 IST on 20 February 2025
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By Sandeep Sinha
MUMBAI – Futures contracts of gold rose on the Multi Commodity Exchange of India and the COMEX as uncertainty over global trade war and inflation lifted the metal's safe-haven demand. The positive sentiment was further aided by sharp inflows in gold exchange-traded funds, rising stocks at COMEX warehouses and weakness in the dollar.
At 1815 IST, the most-active April GOLD contract on the MCX was up 0.3% at INR 86,186 per 10 grams. The most-active April gold contract on COMEX was up 0.9% at $2,961.80 per ounce. The contract hit a new lifetime high of $2,973.4 per ounce earlier Thursday.
"Concerns over the Ukraine conflict and potential shifts in US foreign policy fueled this surge, overshadowing signals from the Federal Reserve that interest rate cuts are not imminent," Kotak Securities said in a note.
In a social media post on Wednesday, US President Donald Trump called Ukrainian President Volodymyr Zelenskyy a dictator 'without election' and urged him to act fast to secure peace, reinforcing gold appeal as a hedge against economic and political turmoil.
On Wednesday, gold holdings with the SPDR Gold Trust, the world's largest gold-backed ETF, rose 8.04 tonnes to 877.98 tonnes, the biggest single-day inflow since Jan. 17. The fund has a market value of $82.88 billion. Gold stocks at COMEX warehouses rose 11.67 tonnes to 1,181.41 tonnes as of Feb. 19, the exchange data showed.
At 1815 IST, the dollar index, which measures the strength of the greenback against a basket of major currencies, was down 0.2% at 106.90. A weaker greenback makes dollar-denominated commodities cheaper for those holding other currencies, thus improving demand.
On the MCX, 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 strikes for the Feb. 28 contract.
For further cues, investors will now shift their focus towards data on US initial jobless claims and Philadelphia Fed Manufacturing Index data later in the day. Analysts polled by Dow Jones had estimated the jobless claim to come in at 215,000, up by 2,000 from last week.
SILVER contracts rose, taking cues from COMEX, and a firm trend in gold and industrial metals. At 1815 IST, the most-active March contract on the MCX was up 1% at INR 97,405 per kilogram. The same-month contract on the COMEX was 1.8% higher at $33.64 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 up 91 points at 20742 points. The April and June gold contracts on the MCX recorded turnovers of INR 41.21 billion and INR 1.98 billion, respectively. The March and May silver contracts saw a turnover of INR 18.37 billion and INR 5.97 billion, respectively.
The spot gold-silver ratio, also known as the Mint ratio, fell to 88.96 on Thursday, indicating that gold underperformed silver. The ratio measures the ounces of silver required to buy an ounce of gold. The ratio was 89.17 on Wednesday.
Outlook for the rest of the session:
--MCX gold seen at INR 85,835–INR 86,765 per 10 gm
--COMEX gold seen at $2,934.07–$2,979.93 an ounce
--MCX silver seen at INR 96,901-INR 98,093 per kg
--COMEX silver seen at $33.22-$33.97 an ounce
End
US$1 = INR 86.66
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Saji George Titus
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