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Informist, Thursday, May 22, 2025

By Ashutosh Pati

MUMBAI – Futures contracts of gold on the Multi Commodity Exchange of India rose because of a sharp fall in the rupee against the dollar. However, gold contracts on the COMEX traded in the red because of a firm dollar and as investors booked profits after three days of gains.

The rupee slumped Thursday and settled at a near six-week low of 86.0025 a dollar. When the rupee depreciates against the dollar, gold prices adjust in the domestic market as it is priced in rupee terms. The rupee's depreciation against the dollar will also make gold imports expensive for Indian buyers, decreasing supply.

At 1734 IST, the most active June GOLD contract on the MCX was up 0.4% at INR 95,920 per 10 grams. The most active June gold contract on COMEX was down 0.2% at $3,308.3 per ounce. Gold prices had risen in the previous three sessions as reports of a potential Israeli strike on nuclear facilities in Iran boosted the safe-haven appeal of the precious metal.

At 1744 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 99.70, up from 99.69 Wednesday. A weaker dollar makes the dollar-denominated precious metal less expensive for holders of other currencies, aiding demand.

"Market sentiment is cautious due to ongoing US fiscal concerns, with a House vote expected on President (Donald) Trump's tax bill, projected to increase the budget deficit," Kotak Securities said in a report. "Furthermore, stalled trade negotiations are dampening market confidence, increasing risk aversion and reducing interest in US assets," the report said.

SILVER contracts fell, tracking a fall in contracts on COMEX. At 1744 IST, the most-active May silver contract on the MCX was down 1% at INR 97,275 per kg. The same-month contract on the COMEX was 2.1% lower at $32.95 per ounce.

For further cues, market participants await the US flash manufacturing purchasing managers' index later in the day.

Outlook for the rest of the session:

--MCX gold seen at INR 93,608–INR 98,048 per 10 gm

--COMEX gold seen at $3,203.4–$3,400.3 an ounce

--MCX silver seen at INR 95,903-INR 100,697 per kg

--COMEX silver seen at $32.14-$34.19 an ounce

End

US$1 = INR 86.00

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

Edited by Avishek Dutta

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