Informist, Tuesday, Jan 18, 2022
By Chinmay Mungse
MUMBAI – GOLD and SILVER contracts on the Multi Commodity Exchange of India were flat today as losses, tracking benchmark COMEX contracts, were offset by a weaker rupee against the US dollar.
* A weak rupee makes the dollar-denominated commodity expensive for Indian investors.
* Gold contracts on COMEX were in the red today as yield on benchmark US Treasury bond rose to a two-year high of 1.85% today.
* “Yields on the 10-year treasury bill touched a two-year high today which makes gold, a non-interest-bearing alternative investment, less attractive,” said Commerzbank AG.
* Also weighing on bullion prices was the strength in the dollar index. The US dollar strengthened against a basket of six major currencies, dampening the appeal for precious metals.
* Bullion prices buckled under pressure as market participants speculated that the US Federal Reserve will act faster to tame the rising inflation in the country after the Consumer Price Index showed inflation rose 7% for the year through December, the highest in almost 40 years.
* “Though inflation is expected to support prices, markets are currently factoring in a faster rate hike from the central bank which will weigh on gold prices,” said Ajay Kedia, research head at Kedia Comtrade.
* Investors are keeping a keen eye on the US Fed meeting, scheduled on January 25-26, expecting that the central bank would throw some light on the timeline of the tapering of the expansionary policy.
* Meanwhile, downside to gold and silver prices was capped by a rising concern over Omicron variant of COVID-19 virus that boosted safe-haven appeal of precious metals.
* At 1745 IST, the most active contracts of bullion were:
–February gold was flat at 47,896 rupees per 10 gm on MCX
–February gold was down 0.2% at $1,812.7 an ounce on COMEX
–March silver was flat at 61,850 rupees per kg on MCX
–-March silver was up 0.1% at $22.94 an ounce on COMEX
* Outlook for the evening session:
–MCX gold seen at 47,700-48,250 rupees
–COMEX gold seen at $1,804-$1,830
–MCX silver seen at 61,500-62,300 rupees
–COMEX silver seen at $22.80-$23.40
End
US$1 = 74.57 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
