More Stories

Informist, Monday, Jan. 6, 2025

 

By Sandeep Sinha

 

MUMBAI – Gold prices are likely to trade with a positive bias this month as ongoing geopolitical tension and uncertainty related to US President-elect Donald Trump's trade policies are seen supporting safe-haven demand for bullion. The sentiment in gold will also get a boost from expectation of improved demand from top buyers in China and India.

 

"The ongoing war in West Asia and between Ukraine and Russia, along with the political crisis in South Korea, will keep gold's safe-haven appeal intact," Ajay Kedia, director at Kedia Advisory said. He recommends investors to adopt buy-on-dip strategy in gold.

 

The resumption of the wedding season in India from Jan. 15 and festive season demand ahead of the Chinese New Year Holiday will support physical demand for gold. China and India are the biggest importers and consumers of gold globally.

 

The prices in the domestic market will be supported by the sharp depreciation in the rupee against the dollar, which is seen as providing support to domestic gold prices. After falling to a lifetime low of 85.8400 during the day, the rupee closed at a record low of 85.8275 a dollar on Monday. A weaker rupee makes dollar-denominated commodities more expensive for domestic buyers.

 

"Several fundamental factors, including ongoing geopolitical uncertainties, expectations of continued central bank purchases, and the metal's traditional role as a safe-haven asset, are supporting precious metal prices. While potential headwinds such as dollar strength and the pace of interest rate hikes may pose challenges, overall market sentiment indicates that gold prices will remain supported," Prithviraj Kothari, managing director of RiddiSiddhi Bullions Ltd., said.

 

In China's market, gold traded at a premium of $10.2 per ounce as of Dec. 27, the World Gold Council data showed. The yellow metal flipped from discount to premium in Chinese market on expectation of festive demand. The discount on gold in India widened to $21.8 per ounce from $10.1 an ounce on Nov. 29.

 

Imports of the yellow metal by India climbed over 200% on year to 170-178 tonnes in November, from 56.67 tonnes in the same month last year, according to trade and industry sources. However, later media reports said that there was a double-counting in imports, following which the Directorate General of Commercial Intelligence and Statistics is undertaking a detailed examination of the gold import data for November. The government is yet to publish official import data for November.

 

The February gold futures on the Multi Commodity Exchange of India are seen at INR 75,459-78,500 per 10 grams this month, according to the median of estimates of 19 broking firms and analysts polled by Informist. On COMEX, prices are seen at $2,560.0-$2,730.0 an ounce. At 1500 IST, the February gold contract on the MCX was at INR 77,110 per 10 gm and the same-month contract on COMEX was at $2,646.2 an ounce.

 

In 2024, the yellow metal recorded one of its best performances in a decade, surging over 26% on COMEX, driven by central bank purchases, geopolitical uncertainties, and monetary policy easing, which supported safe-haven demand for gold.

 

Kothari said amid the continued geopolitical, political and macro uncertainty, gold and silver are expected to retain their appeal as a hedge against inflation. "Investors may adopt a 'buy on dips' strategy as the metal is anticipated to experience periodic oscillations, but the long-term view remains favourable for the next five-to-six months and prices are expected to touch $3,000 an ounce (INR 85,000 per 10 gram) for gold and $38 an ounce (INR 115,000 per kilogram) for silver."

 

In December, the price of gold fell 1.5% on month on COMEX due to outflow in gold exchange-traded funds, money managers reducing their long positions and strength in the dollar, while on MCX prices rose 0.5% due to the sharp depreciation in rupee, which makes dollar-denominated precious metals expensive for domestic buyers.

 

Money managers decreased their net long positions in COMEX gold by 38,884 lots to 13,931 as of Dec. 24, the third straight month of fall, according to Commodity Futures Trading Commission data. Gold holdings with the SPDR Gold Trust, the world's largest gold-backed ETF, fell 6.03 tonnes to 872.52 tonnes in December as investors booked profit ahead of the New Year.

 

The persistent strength in the dollar against rival currencies also restricts any sharp upside in bullion metal. The dollar index, which measures the strength of the greenback against a basket of six major currencies, rose 2.6% in December, the third straight month of gain. "Technical factors argue for some correction or at least loss of momentum for the dollar, but we expect strong buying interest in the dips. Ultimately, the 110.0 target remains very much at reach for Dollar Index in the coming weeks," Francesco Pesole, forex strategist at ING Economics said in a report.

 

Investors will keep a close eye on the US Federal Open Market Committee's December meeting minutes, US December non-farm payrolls data and CPI, which are due out before the Fed's interest rate decision Jan. 30, to get more clarity on the Fed's rate trajectory.

 

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

 

Brokerage	MCX support (INR/10 gm)	MCX resistance (INR/10 gm)	COMEX support ($/oz)	COMEX resistance ($/oz)
Angel One	74,200	79,900	2,591	2,800
Axis Securities	75,000	77,600	2,600	2,680
Emkay Global	75,400	77,700	2,550	2,715
Finlit Consulting	76,500	78,000	2,600	2,750
HDFC Securities	75,700	80,100	2,537	2,730
ICICI Securities	74,500	79,500	2,550	2,750
JM Financial Services	76,000	77,400	2,565	2,690
Kedia Comtrade	75,700	78,500	2,560	2,700
Kotak Securities	75,459	79,441	2,551.5	2,784.5
LKP Securities	75,000	78,250	2,580	2,675
Mirae Asset Sharekhan	74,700	78,500	2,565	2,696
Motilal Oswal	75,900	78,500	2,595	2,685
Prithvi Finmart	76,100	78,100	2,540	2,710
Religare Broking	74,500	79,200	2,550	2,720
Reliance Securities	76,115	78,500	2,525	2,785
RiddhiSiddhi	76,000	79,000	2,600	2,750
SMC Global	75,800	79,200	2,560	2,740
Ventura Securities	74,500	79,000	2,540	2,750
Vijay Bhambwani	75,117	78,778	2,571.4	2,736
Median	75,459	78,500	2,560	2,730

 

End

US$1 = INR 85.83

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

 

Edited by Deepshikha Bhardwaj

 

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

 

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2025. All rights reserved.