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Informist, Wednesday, Feb. 5, 2025

 

By Sandeep Sinha

 

MUMBAI – After delivering strong returns in January, gold prices are seen touching fresh lifetime highs in February on safe-haven demand as US President Donald Trump delivered on his threats and imposed 10% tariffs on imports from China. The sentiment has been further boosted by the mad rush to deliver gold stocks to COMEX warehouses, purchases by central banks and the increase in long positions by money managers.

 

"Trump's erratic tariff decisions are fuelling further uncertainty, which is benefiting gold as a safe haven," Carsten Fritsch, commodity analyst at Commerzbank said in a note. This can be seen in the continued sharp rise in COMEX gold stocks, which have increased by more than 290 tonnes in January, with another 30 tonnes being added on Monday, he said.

 

Gold purchases by global central banks exceeded 1,000 tonnes for the third consecutive year in 2024. Global central banks bought 1,044.6 tonnes of gold in 2024, making them net buyers for 15 consecutive years, the World Gold Council said Wednesday.

 

Money managers increased their net long positions in COMEX gold by 48,208 lots to 230,592 as of Jan. 28, according to Commodity Futures Trading Commission data. The yellow metal prices in the domestic market will be supported by the sharp depreciation in the rupee against the dollar, which hit a fresh lifetime low of 87.49 on Wednesday. A weaker rupee makes dollar-denominated commodities more expensive for domestic buyers.

 

"Markets are shaken by the tariff dramas and demand for safe-haven assets like gold could look to limit the immediate downside, though the soaring US dollar could be an inhibiting factor. However, it appears that the decline could be temporary, as any trade escalation may likely spark renewed interest," Prithviraj Kothari, managing director of RiddiSiddhi Bullions, said.

 

"We expect gold prices to test INR 86,000 per 10 grams on the higher side," Manav Modi, bullion analyst at Motilal Oswal said. He suggests buying on dips near INR 82,000 levels.

 

The discount on gold in India narrowed to $1.2 per ounce on Jan. 31 from $40.5 an ounce on Jan. 22 due to supply tightness in the physical market. India's net gold imports in 2024 fell 4.3% to 712.1 tonnes from 744.0 tonnes in 2023, WGC said.

 

According to a median of estimates of 21 broking firms and analysts polled by Informist, April gold futures on the Multi Commodity Exchange of India are seen at INR 80,300-84,700 per 10 grams this month. On the COMEX, prices are seen at $2,725.0-$2,900.0 an ounce. 

 

The April gold futures contract touched a lifetime high of $2,901.5 an ounce on the COMEX and INR 84,767 per 10 grams on the MCX earlier on Wednesday. At 1701 IST, the April gold futures contract was at INR 84,610 per 10 grams on the MCX and $2,893.7 an ounce on the COMEX.
 

The price of gold in January rose 6.3% on month on the COMEX due to the threats by Donald Trump to impose tariffs on goods imported and interest rate cuts by the Bank of Canada, the European Central Bank, and the Swiss National Bank. On the MCX, gold prices rose 6.2%.

 

Kothari said several unknowns, such as the period, scope and targets of the tariffs, potential retaliation, and the potential economic repercussions, will determine the future course of bullion.

 

The yellow metal is trading at an extremely overbought level and is susceptible to profit-taking at higher levels. The Relative Strength Index, which is used by traders to analyse overbought and oversold levels, is currently at 77.44. A level above 70 indicates overbought and below 30 indicates oversold levels.

 

"Gold could witness some profit-taking this month, but the downside will see more buying," Sriram Iyer, senior research analyst at Reliance Securities, said.

 

The record high prices are keeping retail buyers in top consumers China and India away from purchases and may keep further upside in check. Jewellers are reporting very low sales in the key wholesale market of Zaveri Bazar in Mumbai.

 

Also, the continued strength of the dollar against other currencies will restrict any sharp upside in the bullion metal.

 

Investors will keep a close eye on the Reserve Bank of India's interest rate decision, US January non-farm payrolls data, US CPI and core personal consumption expenditure price index data for further cues.

 

Following is the summary of the poll by Informist on gold prices in February 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	80,800	85,300	2,770	2,930
Axis Securities	80,500	83,500	2,720	2,850
Emkay Global	81,800	84,400	2,725	2,825
Finlit Consulting	80,000	85,000	2,760	2,900
HDFC Securities	80,600	84,700	2,645	2,880
ICICI Securities	78,500	84,000	2,650	2,900
JM Financial Services	80,300	85,500	2,750	2,950
Kedia Comtrade	79,000	84,000	2,700	2,880
Kotak Securities	79,400	85,350	2,740	2,950
LKP Securities	78,500	83,500	2,710	2,865
Mirae Asset Sharekhan	80,300	84,800	2,760	2,925
Motilal Oswal	80,800	85,500	2,740	2,900
Nirmal Bang	81,200	84,000	2,710	2,900
PhillipCapital	79,775	83,500	2,750	2,900
Prithvi Finmart	80,500	86,000	2,740	2,880
Religare Broking	77,000	85,250	2,650	2,930
Reliance Securities	81,300	84,000	2,700	2,860
RiddhiSiddhi	79,600	84,500	2,720	2,900
SMC Global	78,300	84,500	2,790	2,890
Ventura Securities	81,000	86,600	2,740	2,945
Vijay Bhambwani	79,005	84,955	2,715	2,905
Median	80,300	84,700	2,725	2,900

 

End

US$1 = INR 87.47

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

 

Edited by Saji George Titus

 

 

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