More Upside
Analysts say options data suggest gold could hit INR 86,000 per 10 gm Feb
This story was originally published at 22:22 IST on 6 February 2025
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By Sandeep Sinha
MUMBAI – Analysts see a further upside in gold prices as the yellow metal continues to scale new highs on the Multi Commodity Exchange of India, tracking global cues with rising US-China trade tensions and concerns over the Gaza Strip boosting safe-haven demand.
Gold has made a new lifetime high on the domestic bourse in the last eight successive sessions. Traders have piled up fresh long positions on the MCX at the levels of INR 85,000-INR 88,000 strikes.
MCX call data indicate INR 86,000-INR 87,000 level for gold is a possibility, and we can see call writing in the range of INR 87,000-INR 88,000 on the higher side, Ajay Kedia, director at Kedia Advisory, said.
On Wednesday, gold prices on the MCX hit a new lifetime high of INR 84,910 per 10 grams, surpassing the previous high of INR 83,877 per 10 grams made Tuesday. The highest open call position traded Wednesday was INR 86,500 strike, which had risen to INR 88,000 strike by Thursday, indicating bullish momentum. The total traded contracts on Monday, Tuesday, and Wednesday were 27,357, 20,343, and 35,499, respectively. The traded value of gold contracts on Monday was INR 224.26 billion, INR 168.11 billion on Tuesday, and INR 297.60 billion Wednesday.
"The biggest trigger point is the possibility of two interest rate cuts by the US Federal Reserve," Kedia said. "Stability in the dollar index, geopolitical tensions, and tariff war are supporting safe-haven demand for gold," he added.
"The new chapter of tightening sanctions on Iran will keep gold's safe-haven demand intact," said Manoj Jain, director at Prithvi Finmart. Despite a fall in jewellery demand, investment demand for gold will thrive, the World Gold Council said in its latest report.
The yield on the 10-year US Treasury note has fallen from 4.81% on Jan. 14 to 4.40% Wednesday, Jain said. "The fall in bond yields indicates that money is flowing out from US bonds, and if uncertainty persists, then some money from bonds will flow into gold."
On the downside, INR 82,000-INR 80,000 strikes will act as strong support for gold, Jain said. End
US$1 = INR 87.57
Edited by Rajeev Pai
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