India Bullion:Up on MCX, COMEX on bets of less hawkish Fed rate hike

Informist, Thursday, Oct 6, 2022


By Chinmay Mungse


MUMBAI – GOLD and SILVER contracts on the Multi Commodity Exchange of India and the COMEX traded higher today as market participants lowered their expectations of an aggressive rate hike from the US Federal Reserve. 


* According to the CME FedWatch tool, 71.4% of market participants expect the central bank to raise interest rates by 50 basis points in its November meeting, against the earlier expectations of a 75 bps rate hike. 


* The Institute for Supply Management said the US Purchasing Manager's Index fell to 50.9 in September from 52.8 in August, suggesting a slowdown in manufacturing. The United Nations also warned of a global recession induced by the tightening of monetary policies by major central banks.


* "The dollar had tumbled in recent sessions after weaker-than-expected manufacturing data and construction spending report raised hopes the US Fed will be less hawkish in its policy stance," said Ajay Kedia, research head at Kedia Comtrade. 


* In the domestic market, a weaker rupee against the US dollar further supported bullion prices. A weaker rupee makes greenback-denominated commodities more expensive for Indian investors. 


* However, a stronger US dollar against a basket of major currencies capped the gains in bullion contracts in international markets. 


* Investors and market participants are now eyeing the US non-farm payrolls data, which is due for release on Friday, to gauge the US Fed's stance on future rate hikes. According to a poll by Dow Jones, the non-farm payrolls data is expected to show a rise of 275,000 in September, against the 315,000 rise in the previous month. 


* At 1646 IST, the most active contracts of bullion were:
   –December gold was up 0.6% at 51,959 rupees per 10 gm on MCX
   –December gold was up 0.2% at $1,724.2 an ounce on COMEX
   –December silver was up 0.9% at 61,290 rupees per kg on MCX
   –-December silver was up 0.6% at $20.66 an ounce on COMEX


* Outlook for the evening session:

   –MCX gold seen at 51,500-52,200 rupees per 10 gm
   –COMEX gold seen at $1,704-$1,745 an ounce
   –MCX silver seen at 60,500-62,100 rupees per kg
   –COMEX silver seen at $20.20-$21.30 an ounce



US$1 = 81.88 rupees

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


Edited by Vidhi Verma


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