Informist, Monday, Dec 20, 2021
By Chinmay Mungse
MUMBAI – GOLD contracts on the Multi Commodity Exchange of India were in the red today as the rupee strengthened against the US dollar. A stronger rupee against the dollar makes commodities priced in the greenback cheaper for Indian investors.
* Gold contracts on the MCX and COMEX hit multi-week highs on Friday following which investors resorted to profit booking resulting in the downside in prices, said analysts.
* February gold contracts on the MCX hit a three-week high of 47,785 rupees per 10 gm on Friday while contracts for the same month on COMEX hit a three-week high of $1,815.7 per ounce.
* However, rising cases of Omicron variant of the COVID-19 virus kept the downside of gold prices capped. “Looming fear over rising tension of the Omicron variant supported safe-haven buying in gold and silver,” said Manoj Jain, head of commodity research at Prithvi Finmart.
* A downside in the global equity markets turned investor focus towards the bullion market, supporting gold and silver prices. “Equities fell across the board, reeling from a hawkish turn by global central banks looking to combat rising price pressures and the economic risk posed by rising COVID-19 cases,” said Sriram Iyer, senior analyst at Reliance Securities.
* Following the US Federal Reserve’s decision to wrap up asset purchase tapering soon and hike interest rates, Bank of England and Central Bank of Russia also took the measures to curb inflation. Gold is widely considered a hedge against inflation.
* Bank of England surprised most market participants by becoming the first major central bank to raise interest rates since the start of the COVID-19 pandemic, increasing rates to 0.25% from 0.1% on Thursday. While Bank of Russia hiked the interest rates by 100 bps to 8.5%.
* At 1742 IST, the most-active contracts of bullion were:
–February gold was down 0.5% at 48,371 rupees per 10 gm on MCX
–February gold was down 0.5% at $1,796.5 an ounce on COMEX
–March SILVER was down 1.2% at 61,417 rupees per kg on MCX
–-March silver was down 1% at $22.30 an ounce on COMEX
* “Depreciating dollar and widening impact of Omicron on the global economy might continue supporting gold in the week ahead,” said Angel One commodities in a report.
* Outlook for the evening session:
–MCX gold seen at 48,400-49,050 rupees
–COMEX gold seen at $1,784-$1,810
–MCX silver seen at 61,500-63,100 rupees
–COMEX silver seen at $21.84-$23.00. End
US$1 = 75.90 rupees
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Maheswaran Parameswaran
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Source: Cogencis
