Informist, Friday, Mar 11, 2022
By Chinmay Mungse
MUMBAI – Gold futures contracts were down today on the Multi Commodity Exchange of India and the COMEX after the European Central Bank said it will end its bond purchases in the third quarter.
* The ECB on Thursday said it will end its bond purchases in the third quarter. This led to expectations of an interest rate hike once the asset purchase programme ends. The central bank said monthly net purchases under the programme would amount to 40 bln euros or $44.5 bln in April, 30 bln euros in May and 20 bln euros in June.
* Investors have now shifted focus to the US Federal Reserve meeting scheduled between Monday and Tuesday, said analysts. Expectations that the Fed will raise its benchmark overnight interest rate by at least 25-50 basis points stand at 94%, according to CME's FedWatch Tool.
* "Market is currently concerned about the path that US Fed would be taking to hike interest rates to cool the rising inflation," said Veeresh Hiremath, director at Finlit Consulting.
* Fed Chairman Jerome Powell has already prepared markets to expect a rate hike of 25 bps, against the earlier expectations of a 50 bps rate hike.
* Bullion prices in the international markets were also pressured by a stronger US dollar against a basket of major currencies.
* However, demand for GOLD remains intact as US Consumer Price Index-based inflation was the highest in 40 years at 7.9% in February. Gold is widely regarded as a hedge against inflation.
* Further, talks between Russian Foreign Minister Sergei Lavrov and Ukraine's Dmytro Kuleba in Turkey yielded no results. "The risks remain, in other words, and the safe-haven demand from investors is still considerable," said Commerzbank AG.
* At 1636 IST, the most-active contracts of bullion were:
--April gold was down 0.3% at 53,075 rupees per 10 gm on MCX
--April gold was down 0.1% at $1,998.1 an ounce on COMEX
--May SILVER was flat at 70,456 rupees per kg on MCX
–-May silver was up 0.1% at $26.27 an ounce on COMEX
* Outlook for the evening session:
--MCX gold seen at 52,890-53,730 rupees
--COMEX gold seen at $1,975-$2,010
--MCX silver seen at 69,710-71,720 rupees
--COMEX silver seen at $25.79-$26.42
End
US$1 = 76.56 rupees
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Ashish Shirke
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