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Informist, Thursday, Mar. 20, 2025

By Ashutosh Pati

MUMBAI – Futures contracts of gold were steady on the Multi Commodity Exchange of India and the COMEX after hitting fresh record highs earlier on Thursday, as a firm dollar index offset the safe-have demand of the yellow metal. Gold prices rose earlier in the day as renewed geopolitical tensions in West Asia fuelled the safe-haven appeal of the precious metal.

At 1741 IST, the most-active April GOLD contract on the MCX was steady at INR 88,569 per 10 grams, after hitting a fresh lifetime high of INR 89,796 per 10 gm. The most active April gold contract on COMEX remained steady at $3,042.2 per ounce. The contract hit a fresh lifetime high of $3,065.2 per ounce earlier in the day.

"The prices are steady near record highs as it is underpinned by heightened expectations of US Federal Reserve rate cuts, despite acknowledging economic uncertainties and robust safe-haven demand amidst escalating geopolitical tensions," analysts at Kotak Securities said in a report.

The US Federal Reserve left the interest rates unchanged at 4.25-4.50% for the second straight meeting, in line with market expectations. The US Fed also projected slower economic growth and higher inflation this year, which highlights instability amid US trade policies. 

US Fed official continued to guide for only 50 basis points of rate cuts this year. According to the CME FedWatch tool, market participants are pricing in 75 bps of rate cuts in 2025. Typically, gold has an inverse relationship with interest rates, with lower rates boosting the appeal of the non-interest-bearing precious metal.

Meanwhile, Israeli airstrikes pounded the Gaza strip on Tuesday, killing over 400 people, breaking the ceasefire that was in effect since mid-January. Israeli Prime Minister Benjamin Netanyahu hinted at more such attacks. "This is just the beginning," Netanyahu said in a televised address.

SILVER contracts fell on the MCX tracking a decline in contracts on the COMEX because of a firm dollar. At 1744 IST, the Dollar Index, which measures the strength of the greenback against a basket of six major currencies, was up 0.4% at 103.84. A stronger greenback makes dollar-denominated commodities expensive for those holding other currencies, denting demand.

At 1748 IST, the most-active May silver contract on the MCX was down 0.7% at INR 99,204 per kilogram. The same-month contract on the COMEX was 0.9% lower at $33.90 per ounce. For further cues, market participants are waiting for the US existing home sales data due later in the day.

Outlook for the rest of the session:

--MCX gold seen at INR 87,568–INR 89,930 per 10 gm

--COMEX gold seen at $2,995.4–$3,083.8 an ounce

--MCX silver seen at INR 97,571-INR 101,949 per kg

--COMEX silver seen at $32.65-$34.36 an ounce

End

US$1 = INR 86.37

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

Edited by Subhojit Sarkar

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