Informist, Monday, Sep 11, 2023
By Sandeep Sinha
MUMBAI – Futures contracts of GOLD rose on the Multi Commodity Exchange of India and the COMEX today because of a pullback in the dollar, which makes precious metals priced in the greenback cheaper for those holding other currencies.
The positive sentiment for the bullion was also supported by traders increasing their long positions on COMEX Gold by 8206 lots to 66340 as of Sep 5, according to Commodity Futures Trading Commission data.
The dollar index, which measures the strength in the greenback against a basket of six major currencies, was down 0.3% at 104.64 today, ahead of the US consumer price index data to be released later this week.
Traders will also seek cues from the outcome of the European Central Bank's monetary policy meeting.
"The direction of precious metals continues to be dictated by incoming US economic data, as it eventually will determine the direction the US Federal Reserve decides to go on rates," said Ole Hansen, head of commodity strategy at Saxo Bank, in his weekly note.
"Gold found trendline resistance at $1,947 per ounce, and has returned to test the 200-day moving average, currently at $1,918 per ounce ahead of $1,910 per ounce, the 0.618 Fibonacci correction of the August rally. Overall, the metal is stuck in a narrowing range, currently between $1,893 per ounce and $1,942 per ounce," Hansen said.
On Friday, gold holdings with SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, remained steady for a second straight day at 886.64 tn. The fund has a market value of $54.93 bln.
The spot gold-silver ratio, also known as the mint ratio, was lower at 83.31, indicating that silver had outperformed gold. The ratio measures the ounces of silver required to buy an ounce of gold.
SILVER prices traded higher because of short-covering after a sharp sell-off last week, an uptick in industrial metal prices and positive cues from gold.
"The recent robust US economic data reinforced the case for the Federal Reserve to keep rates elevated, tarnishing the precious metal's allure," said Daniel Hynes, senior commodities' strategist at ANZ Research, in a note.
At 1610 IST, MCX Bulldex, an index tracking the real-time performance of gold and silver futures on the MCX, was up 42 points, or 0.3%, at 15750.
The October and December gold contracts recorded turnovers of 9.17 bln rupees and 2.90 bln rupees, respectively. At 1612 IST, the September and December silver contracts saw turnovers of 11.70 bln rupees and 309.19 mln rupees, respectively.
Traders cut their short positions by 124 lots on the domestic exchange. Open interest in the most-active October gold futures was 11,692 lots. Market players covered their short positions in the MCX December silver contract by 587 lots.
The average traded price for the October gold contract on the domestic exchange was 59,019.34 rupees per 10 gm.
On the technical charts, MCX October gold contracts traded higher than the 20-, 50- and 200-day simple moving averages but below the five- and 100-day simple moving averages on the daily chart. The momentum oscillator, Relative Strength Index, was at 49.77, signalling a range-bound movement in prices.
At 1616 IST, following were the most active contracts of bullion:
-October gold was up 0.3% at 59,045 rupees per 10 gm on MCX
-December gold was up 0.4% at $1,949.65 an ounce on COMEX
-December silver was up 0.8% at 72,164 rupees per kg on MCX
–December silver was up 1.1 at $23.42 an ounce on COMEX
Outlook for the rest of the session:
-MCX gold seen at 58,700–59,300 rupees per 10 gm
-COMEX gold seen at $1,935.0–$1,960.0 an ounce
-MCX silver seen at 71,500-72,500 rupees per kg
-COMEX silver seen at $23.25-$23.60 an ounce
End
US$1 = 83.03 rupees
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Tanima Banerjee
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