Informist, Monday, Aug 8, 2022
By Chinmay Mungse
MUMBAI – Gold and silver futures contracts were trading higher today on the Multi Commodity Exchange and COMEX as the dollar index and yields on US Treasury notes fell.
* The dollar index and US bond yields trimmed some of Friday’s gains because of market correction. On Friday, the dollar index rose to a near one-week high of 106.93 following better-than-expected US non-farm payrolls data.
* Non-farm payrolls in the US rose by 528,000 in July, exceeding market expectations of an increase of 260,000.
* This gave rise to expectations of a 75 basis point rate hike by the US Federal Reserve at its meeting in September. According to the CME FedWatch tool, market participants are pricing in a 70% chance that the Fed will raise rates by 75 bps.
* However, this capped the upside in GOLD prices.
* “Gold prices traded up supported by a weaker dollar. However, the upside was capped as stronger than expected US jobs data has raised expectations of aggressive Fed rate hikes,” said Tapan Patel, senior analyst at HDFC Securities.
* Hawkish comments by San Francisco Fed President Mary Daly also weighed on bullion prices. According to reports, Daly said that a 50 bps rate hike isn’t a done deal at the next policy meeting in September.
* Investors are now waiting for US consumer price index data, due Wednesday. Analysts expect US CPI inflation to rise by 0.3% month-on-month in July. “If the US CPI inflation is higher, then the US Fed might continue with an aggressive stance,” said Sriram Iyer, senior analyst at Reliance Securities.
* At 1653 IST, the most-active contracts of bullion were:
–October gold was up 0.5% at 52,145 rupees per 10 gm on MCX
–October gold was up 0.4% at $1,798.9 an ounce on COMEX
–September SILVER was up 1.6% at 58,266 rupees per kg on MCX
–-September silver was up 2.1% at $20.25 an ounce on COMEX
* Outlook for the evening session:
–MCX gold seen at 51,700-52,200 rupees
–COMEX gold seen at $1,770-$1,804
–MCX silver seen at 57,000-57,750 rupees
–COMEX silver seen at $19.80-$20.40.
US$1 = 79.66 rupees
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Ashish Shirke
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