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Informist, Wednesday, Apr. 16, 2025

By Sandeep Sinha

MUMBAI – Futures contracts of gold rose on the Multi Commodity Exchange of India and the COMEX on Wednesday due to escalating trade tensions between the US and China, which boosted the yellow metal's safe-haven demand. The positive momentum was further lifted by weakness in the dollar and a fresh technical breakout.

The US announced that China will now face tariffs up to 245% on exports to the US as a result of Beijing's retaliation on reciprocal tariffs imposed by President Donald Trump to address "unfair trade practices", escalating the trade war between the world's two largest economies.

At 1830 IST, the most-active June GOLD contract on the MCX was up 2% at INR 95,283 per 10 grams, after touching a new life high of INR 95,435 per 10 grams earlier Wednesday. The most-active June gold contract on the COMEX was 2.6% higher at $3,324.80 per ounce. The contract hit a fresh all-time high of $3,334.2 per ounce during the day.

The bullion metal crossing the crucial $3,300 an ounce level on the COMEX for the first time has given a fresh buy signal, analysts said. The trend remains bullish for gold as it is trading above the key averages on the daily chart and the momentum indicator Relative Strength Index is at 72.46, suggesting further upside in the price, they said.

At 1830 IST, the dollar index, which measures the strength of the greenback against a basket of major currencies, was down 0.4% at 99.66. A weaker greenback makes dollar-denominated commodities cheaper for those holding other currencies, thus improving demand.

"Gold showed a solid rally once again amid renewed tariff panic, as market participants seized the opportunity to go long amid the escalating trade tussle," Jateen Trivedi, vice-president and research analyst at LKP Securities, said in a note. "The rally is largely driven by geopolitical uncertainty and the absence of any constructive progress in tariff negotiations between the US and China. Until there is a concrete update indicating de-escalation, gold is likely to remain elevated," he said.

The highest call open interest on gold was at the INR 95,000-INR 97,000 strikes, indicating a bullish view. The highest put open interest was at the INR 93,000-INR 90,000 strikes for the Apr. 30 contract.

On Tuesday, gold holdings with the SPDR Gold Trust, the world's largest gold-backed ETF, remained steady for the third day at 953.15 tonnes. The fund has a market value of $98.65 billion. On the National Stock Exchange, the total value of gold ETFs traded on Wednesday was INR 3.45 billion, down from Tuesday was INR 3.24 billion.

Investors will take further cues from US Federal Reserve Chairman Jerome Powell's speech later in the day. They will also watch out for further developments in the US-China trade relations.

SILVER contracts traded higher, taking cues from COMEX, and tracking the firm trend in gold. At 1830 IST, the most-active May contract on the MCX was up 1.7% at INR 96,381 per kg. The same-month contract on the COMEX was 1.8% higher at $32.87 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 the INR 95,000-INR 90,000 strikes 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 440 points at 21960. The June and August gold contracts on the MCX recorded turnovers of INR 91.86 billion and INR 7.13 billion, respectively. The May and July silver contracts saw turnovers of INR 37.58 billion and INR 10.88 billion, respectively.

The spot gold-silver ratio, also known as the Mint ratio, rose to 100.42 on Wednesday, indicating that gold had outperformed silver. The ratio measures the ounces of silver required to buy an ounce of gold. The ratio was 100.08 on Tuesday.

Outlook for the rest of the session:

--MCX gold seen at INR 94,458–INR 96,110 per 10 gm

--COMEX gold seen at $3,290.0–$3,350.0 an ounce

--MCX silver seen at INR 95,447-INR 97,263 per kg

--COMEX silver seen at $32.11-$33.20 an ounce

End

US$1 = INR 85.67

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

Edited by Saji George Titus

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