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Informist, Wednesday, Nov. 6, 2024

 

By Sandeep Sinha

 

MUMBAI – After hitting multiple lifetime highs in October, gold prices are likely to see a correction in November due to profit-taking, analysts said. The weakening global central bank demand, declining retail demand and a likely 25-basis- point interest rate cut by the US Federal Reserve this week could also weigh on bullion's safe-haven appeal, they said.

 

The precious metal may witness sharp volatility in prices due to a slew of political developments and crucial economic data due this month, including the US presidential election, the situation in West Asia, the Group of 19 countries plus the European Union (G-20) meeting, China’s National People’s Congress on economic stimulus, and the US GDP and consumer price index.

 

The dollar index, which measures the strength of the greenback against a basket of major currencies, rose 3.1% in October on safe-haven demand, which put downward pressure on the yellow metal. "We may see some correction in (gold) prices as it (Donald Trump's victory) will strengthen dollar index and push yields upward as Trump’s proposed policies seem to be inflationary which may limit Fed from cutting interest rates," Raj Deepak Singh, derivative head at ICICI Securities said.

 

Trump is set to return to the White House as the 47th president after he won the key swing state of Pennsylvania. The Associated Press said Trump had won 267 electoral votes compared with 224 for Vice President Kamala Harris. US presidential candidates require a minimum of 270 electoral votes to win the election.

 

The December gold futures on the Multi Commodity Exchange of India are seen at INR 76,450-INR 80,300 per 10 grams this month, according to the median of estimates of 17 brokerage houses polled by Informist. On the COMEX, prices are seen at $2,660.0-$2,820 an ounce. At 1511 IST, the December gold contract was at INR 78,005 per 10 gm and the same-month contract on the COMEX was at $2,726.6 an ounce.

 

Gold hit an all-time high of $2,801.80 an ounce On Oct. 30 on the COMEX and INR 79,775 per 10 gm on the MCX due to uncertainties related to the US presidential election and geopolitical tensions in West Asia.

 

According to the World Gold Council's latest gold demand trend report, gold purchases by global central banks in Jul-Sept fell 49% on year to 186.2 tonnes because of a sharp rise in prices. Gold jewellery demand in top importer China fell 33% on year to 102.5 tonnes due to low consumer confidence and slower economic growth.

 

In India, the second-biggest importer and consumer of gold, the demand for gold during Dhanteras is estimated to have declined 15-16% on year to 25 tonnes-30 tonnes because of the sharp rise in prices. Gold imports to India in September fell 57% on month to 58.98 tonnes as the record-high domestic prices led both consumers and manufacturers to curtail their purchases. Traders said bullion imports are expected to have remained relatively weak in October due to high prices.

However, the downside to the prices of the precious metal is limited due to fresh inflows in gold exchange-traded funds and the possibility of escalation in tensions in West Asia. Gold holdings with SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 20.71 tonnes to 892.65 tonnes in October due to renewed interest in the metal.

 

Singh of ICICI Securities said gold is likely to find support at $2,680 an ounce and if that level is broken then it might fall to $2,600. MCX Gold December is likely to find immediate support near INR 77,500. A break below this level could pull down prices further towards INR 76,000. MCX Gold futures may face stiff resistance near INR 79,500 .

 

Following is a summary of a poll by Informist on gold prices in November and details of estimates by respondents, in alphabetical order:

 

Brokerage house	MCX support (INR/10 gm)	MCX resistance (INR/10 gm)	COMEX support ($/oz)	COMEX resistance ($/oz)
Angel One	76,000	80,900	2,665	2,840
BlinkX by JM Financial	77,500	80,000	2,700	2,880
Emkay Global	76,450	79,690	2,700	2,800
Finlit Consulting	76,000	80,000	2,700	2,800
ICICI Securities	75,000	81,500	2,660	2,830
Kedia Comtrade	76,400	80,400	2,680	2,820
Kotak Securities	75,000	81,000	2,615	2,880
LKP Securities	76,700	80,300	2,670	2,810
Motilal Oswal	76,500	82,000	--	--
Nirmal Bang	76,200	80,880	2,640	2,840
PhillipCapital	76,800	79,700	2,670	2,800
Prithvi Finmart	76,800	79,200	2,650	2,800
Reliance Securities	75,500	80,500	2,600	2,850
SMC Global	75,300	79,900	2,540	2,820
Sharekhan by BNP Paribas	76,900	80,100	2,649	2,802
Ventura Securities	76,900	79,500	2,660	2,789
Vijay Bhambwani	76,760	80,781	2,592.5	2,827.7
Median	76,450	80,300	2,660.0	2,820.0

 

End

US$1 = INR 84.25

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

 

Edited by Saji George Titus

 

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