Informist, Tuesday, May 23, 2023
By Sandeep Sinha
MUMBAI – Futures contracts of gold extended their fall on the Multi Commodity Exchange of India and the COMEX today because of a rise in US Treasury yields and the dollar, which makes commodities priced in the greenback expensive for holders of other currencies.
The dollar index, which measures the strength of the greenback against a basket of six major currencies, was up 0.3% at 105.52, the highest level since Mar 20. The dollar index gained on hawkish comments from Federal Reserve Bank of St Louis President James Bullard and Federal Reserve Bank of Minneapolis President Neel Kashkari on Monday about further rate hikes.
The expectations of higher interest rates reduce appeal of non-yielding assets such as gold.
“Gold price continue to inch lower on the back of stronger dollar and hawkish comments from US Fed officials which weighed on safe-haven assets, while markets looked for more clarity around US debt ceiling negotiations,” said Navneet Damani, senior vice president – commodity research at Motilal Oswal Financial Services in a note.
Markets are pricing in an 80% chance of rates being held steady next month, yet a 20% chance of a 25-basis-point hike, according to CME Fed-Watch tool.
However, continued inflows into gold exchange traded funds, limited the downside in the precious metal. Gold holdings with the SPDR Gold Trust, the world’s largest gold-backed exchange traded fund, rose by 1.15 tn to 943.89 tn. The fund has a market value of $59.77 bln.
The spot gold-silver ratio, also known as the mint ratio, was higher at 84.56, indicating that gold has outperformed silver. The ratio measures the ounces of silver required to buy an ounce of gold.
MCX Bulldex, an index tracking the real-time performance of gold and silver futures on the MCX, was down by 142 points, or 0.9%, at 16132 points at 1755 IST today.
The June and August gold contracts recorded turnovers of 31.67 bln rupees and 9.27 bln rupees, respectively. At 1755 IST, the July and September silver contracts saw turnovers of 22.28 bln rupees and 1.50 bln rupees, respectively.
* At 1755 IST, following were the most active contracts of bullion:
-June gold was down 0.6% at 59,885 rupees per 10 gm on MCX
-June gold was down 0.7% at $1,962.60 an ounce on COMEX
-July silver was down 1.9% at 71,332 rupees per kg on MCX
–July silver was up 2.3% at $23.31 an ounce on COMEX
* Outlook for the rest of the session:
-MCX gold seen at 59,450–60,180 rupees per 10 gm
-COMEX gold seen at $1,936–$1,980 an ounce
-MCX silver seen at 70,650-72,000 rupees per kg
-COMEX silver seen at $22.78-$23.50 an ounce
End
US$1 = 82.79 rupees
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Deepshikha Bhardwaj
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