India Bullion: Gold range bound; weak dollar cushions fall

Informist, Monday, Jul 17, 2023

By Sandeep Sinha

MUMBAI – Futures contracts of GOLD traded in a tight range today on the Multi Commodity Exchange of India, after sharp gains seen last week, taking cues from the COMEX as traders reassessed recent optimism over US interest rates peaking sooner than expected after a report on Friday showed the Federal Reserve may need to do more to try to tame inflation.

The University of Michigan Consumer Sentiment Index rose to 72.6 in June from 64.4 in May. The robust consumer sentiment data may let the Fed maintain a hawkish stance.

Also weighing on sentiment were hawkish comments from Federal Reserve Governor Christopher Waller suggesting two 25-basis-point hikes this year to bring inflation towards the 2% target range of the US central bank that led traders to book profit.

However, weakness in the dollar limited losses for the bullion. A weak greenback makes dollar-denominated precious metals cheaper for foreign buyers.

The dollar index, which measures the strength in the greenback against a basket of six major currencies, was down 0.1% at 99.88.

Gold holdings with SPDR Gold Trust, the world’s largest gold-backed exchange traded fund, remained steady for the second day at 914.66 tn. The fund has a market value of $57.44 bln.

The spot gold-silver ratio, also known as the mint ratio, was higher at 78.72, indicating that gold had outperformed silver. The ratio measures the ounces of silver required to buy an ounce of gold.

SILVER prices fell due to profit-booking after sharp gains seen in the past few days and sell-off in industrial metals post Chinese GDP data, which raised concerns about economic recovery. China’s economy grew 6.3% on year in the second quarter (Apr-Jun) of this year as against the analysts’ forecast of 7.3% growth.

At 1735 IST, MCX Bulldex, an index tracking the real-time performance of gold and silver futures on the MCX, was down 23 points, or 0.1%, at 16139.

The August and October gold contracts recorded turnovers of 12.32 bln rupees and 2.51 bln rupees, respectively. At 1740 IST, the September and December silver contracts saw turnovers of 12.06 bln rupees and 279.58 mln rupees, respectively.

The average traded price for the August gold contract during the day on the domestic exchange was 59,184.50 rupees per 10 gm.

On technical charts, the MCX August gold contract traded higher than the five-, 20-, 100- and 200-day simple moving averages, but was lower than the 50-day simple moving average on the daily chart. The momentum oscillator, Relative Strength Index, was at 56.20, suggesting firmness in the price.

At 1740 IST, following were the most active contracts of bullion:

-August gold was down 0.2% at 59,201 rupees per 10 gm on MCX

-August gold was down 0.2% at $1,960.75 an ounce on COMEX

-September silver was down 0.6% at 75,510 rupees per kg on MCX

–September silver was down 0.7% at $25.03 an ounce on COMEX

Outlook for the rest of the session:

-MCX gold seen at 58,900–59,550 rupees per 10 gm

-COMEX gold seen at $1,948.0–$1,980.0 an ounce

-MCX silver seen at 75,300-75,950 rupees per kg

-COMEX silver seen at $24.95-$25.20 an ounce

End

US$1 = 82.04 rupees

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

Edited by Deepshikha Bhardwaj

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Source: Cogencis