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Informist, Tuesday, Mar. 4, 2025

By Sandeep Sinha

MUMBAI – Futures contracts of gold rose on the Multi Commodity Exchange of India and the COMEX because of safe-haven demand as the US suspended military aid to Ukraine. Fears of a trade war after the 25% tariff announced by US on imports from Mexico and Canada and an additional 10% duty on Chinese goods took effect Tuesday also boosted the safe-haven appeal of gold.

Continued weakness in the Dollar Index also pushed up gold prices. A weak greenback makes dollar-denominated commodities cheaper for those holding other currencies, thus improving demand for precious metals. At 1730 IST, the Dollar Index, which measures the strength of the greenback against a basket of major currencies, was down 0.4% at 106.12.

"Gold remained positive as COMEX gold surged nearly 1% to $2,920, supporting MCX gold, which gained INR 700 but slightly underperformed due to minor rupee appreciation. The rally was driven by fresh tariff retaliations, with Canada and China imposing tariffs on the US, fueling safe-haven demand," Jateen Trivedi, vice-president and research analyst at LKP Securities, said in a note.

At 1730 IST, the most-active April gold contract on the MCX was up 0.9% at INR 86,163 per 10 grams. The most-active April gold contract on COMEX was 1% higher at $2,930.50 per ounce. The highest call open interest was at INR 90,000 strike price, indicating a bullish view. The highest put open interest was at INR 84,000 strike for the Mar. 26 contract.

However, outflow from gold exchange-traded funds limited the upside in gold prices. On Monday, gold holdings with SPDR Gold Trust, the world's largest gold-backed ETF, fell by 3.45 tonnes to 900.93 tonnes. The fund has a market value of $83.41 billion. On the National Stock Exchange, the total value of gold ETFs traded Tuesday was INR 1.59 billion, down from INR 1.81 billion Monday.

SILVER contracts rose taking cues from COMEX and firm trend in gold. At 1730 IST, the most-active May contract on the MCX was up 0.5% at INR 96,519 per kg. The same-month contract on COMEX was up 0.6% at $32.51 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 Apr. 24 expiry contract.

The MCX Bulldex, an index that tracks the real-time performance of gold and silver futures on the MCX, was up 205 points at 20475 points. The April and June gold contracts on the MCX recorded turnovers of INR 39.05 billion and INR 5.90 billion, respectively. The May and July silver contracts saw turnovers of INR 9.91 billion and INR 821.0 million, respectively.

The spot gold-silver ratio, also known as the Mint ratio, rose to 91.65 on Tuesday, indicating that gold had outperformed silver. The ratio measures the ounces of silver required to buy an ounce of gold. The ratio was 91.32 on Monday.

Outlook for the rest of the session:

--MCX gold seen at INR 85,851–INR 86,609 per 10 gm

--COMEX gold seen at $2,907.0–$2,946.23 an ounce

--MCX silver seen at INR 95,100-INR 97,104 per kg

--COMEX silver seen at $32.10-$32.60 an ounce

End

US$1 = INR 87.27

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

Edited by Ashish Shirke

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