India Bullion: Down on MCX; flat on COMEX ahead of Fed decision

Informist, Wednesday, May 4, 2022


By Chinmay Mungse


MUMBAI – GOLD and SILVER contracts were in the red today on the Multi Commodity Exchange of India pressured by a stronger rupee against the US dollar.


* A stronger rupee makes the dollar-denominated commodity cheaper for Indian investors.


* The benchmark GOLD and SILVER contracts on the COMEX were flat today, as traders remained cautious ahead of the US Federal Reserve's policy meet conclusion later today.


* Analysts expect the US Fed to raise interest rates by 50 basis points.


* "The US Fed is widely expected to announce a big interest rate hike in an effort to curb high inflation when it hands down its policy decision later in the day. We expect gold prices to trade sideways to down for the day," said Tapan Patel, senior analyst at HDFC Securities.


* The expectations of a hawkish stance on inflation from the US Fed drove the yields on benchmark US Treasury bonds to 3%, the highest level since 2018, which dampened the demand for the precious metal.


* However, a weaker US dollar against a basket of major currencies and fears of a dovish stance by the US Fed supported gold prices in international markets. "A dovish meeting (decision) or escalation in geopolitical tensions or inflation fears could push gold," said Sriram Iyer, senior analyst at Reliance Securities.


* At 1621 IST, the most-active contracts of bullion were:
   –June gold was down 0.3% at 50,667 rupees per 10 gm on MCX
   –June gold was flat at $1,869.3 an ounce on COMEX
   –May silver was down 0.2% at 62,350 rupees per kg on MCX
   –-May silver was down flat at $22.61 an ounce on COMEX


* Outlook for the evening session:
   –MCX gold seen at 50,400-51,000 rupees
   –COMEX gold seen at $1,850-$1,895
   –MCX silver seen at 62,650-63,830 rupees
   –COMEX silver seen at $22.18-$23.22.




US$1 = 76.41 rupees

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


Edited by Namrata Rao



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