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India Bullion: Falls on strong rupee, COMEX slips on profit booking

Friday, May 24

 

By Roshni Devi

 

MUMBAI – Profit booking and a strong rupee against the dollar weighed on bullion contracts on the Multi Commodity Exchange of India today, analysts said. A firm rupee makes the import of dollar-denominated commodities like gold cheaper.

 

At 1654 IST, the June gold contract on MCX was down 0.4% at 31,530 rupees per 10 gm, having risen to a one-week high of 31,735 rupees per 10 gm. The same-month contract on COMEX was down 0.3% at $1,281.20 an ounce after it hit a one-week high of $1,287.10 an ounce on Thursday.

 

A sharp fall in global stock markets and renewed worry about the prolonged trade tension between the US and China had buoyed gold prices on Thursday.

 

On Thursday, the US rolled out a $16-bln aid package for farmers hit by the tariff war with China. The move served as a reminder to the financial markets that the trade deal with China was in trouble, and rekindled fresh fears over economic growth in the Eurozone, Vandana Hari, an independent energy analyst and founder of Vanda Insights, said in a report.

 

The South China Morning Post reported that the recent restrictions imposed by the US on Chinese telecom giant Huawei had led Beijing to rethink its economic relationship with that country. Beijing, which was showing little interest to resume talks, said the US needed to "correct its wrong actions" if it wanted to continue negotiations.

 

The US' flash purchasing managers' index dropped to 50.6 in May from 52.6 in April and the composite PMI fell to 50.9 from 53.0, which had also boosted gold's appeal as a haven asset.

 

A near 7% slump in global crude prices had also boosted haven demand for gold.

 

"Gold is not only a haven in these turbulent times, but looking forward to inflation, the sleeping giant, awakening," Investing.com quoted George Gero, precious metals analyst at RBC Wealth Management, as saying.

 

UK Prime Minister Theresa May today announced she would resign from her position as well as chief of the Conservative and Unionist Party on Jun 7, paving the way for a new leader to take office. This may also support gold prices going ahead.

 

The July silver contract was down 0.5% at 36,458 rupees per kg and the same-month contract on COMEX was down 0.5% at $14.54 an ounce.

 

OUTLOOK

For the rest of the day, gold contracts on MCX are seen at 31,460-31,900 rupees per 10 gm. On COMEX, prices are seen in a range of $1,272-$1,295.

 

The silver contract on MCX is seen at 35,300-37,500 rupees per kg, and at $14.20-$14.90 an ounce on COMEX.  End

 

US$1 = 69.52 rupees

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

 

Edited by Subham Mitra

 

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This copy was first published on the Cogencis WorkStation

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