India Bullion: Gold prices a tad up on safe haven demand, weak dollar

Informist, Wednesday, May 3, 2023

By Sandeep Sinha

MUMBAI – Futures contracts of gold were a tad higher on the Multi Commodity Exchange of India and the COMEX today due to safe haven appeal and a weak dollar. The sharp rise in gold exchange traded funds also lifted prices of the precious metal.

Gold holdings with SPDR Gold Trust, the world’s largest gold-backed exchange traded fund, rose by 3.47 tn to 928.30 tn. The fund has a market value of $59.53 bln.

The dollar index, which measures the strength of the greenback against a basket of six major currencies, was down 0.4% at 101.56 ahead of US Federal Reserve’s policy decision later in the day. A weak greenback makes precious metals priced in dollars cheaper for holders of other currencies, boosting demand.

“Amid renewed concerns about US rate hikes slowing down the economy, the gold price has once again managed to exceed the $2,000 per troy ounce mark,” said Thu Lan Nguyen, head of commodity research at Commerzbank in a note.

US ADP employment change and ISM Services PMI will be closely watched in the evening. “Focus will be on the FOMC (Federal Open Market Committee) meeting where the Federal Reserve is expected to hike rates by 25 bps to 5.25% and might signal a pause in the coming meeting. Fed chair Jerome Powell is expected to sound hawkish despite recent banking jitters, as US core inflation remains sticky,” Kotak Securities said in a report.

The spot gold-silver ratio, also known as Mint Ratio, was lower at 79.77 to 1, which indicates that silver has outperformed gold. 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 up 32 points, or 0.2%, at 16565 as of 1715 IST.

As of 1715 IST, the June and August gold contracts recorded turnovers of 12.33 bln rupees and 1.62 bln rupees, respectively. At the same time, the July and September silver contracts saw a turnover of 8.35 bln rupees and 422.56 mln rupees, respectively.

* At 1715 IST, the most active contracts of bullion were:
–June gold was up 0.2% at 60,703 rupees per 10 gm on MCX
–June gold was up 0.1% at $2,024.0 an ounce on COMEX
–July silver was up 0.1% at 76,269 rupees per kg on MCX
–-July silver was down 0.3% at $25.55 an ounce on COMEX

* Outlook for the rest of the session:
–MCX gold seen at 60,350–61,250 rupees per 10 gm
–COMEX gold seen at $2,015–$2,030 an ounce
–MCX silver seen at 74,700-77,300 rupees per kg
–COMEX silver seen at $24.95-$25.48 an ounce

End

US$1 = 81.81 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