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India Bullion: Gold dn on firm rupee; COMEX slips on strong equities

Tuesday, Jun 11

 

By Roshni Devi

 

MUMBAI – A rise in Asian equity markets dragged down gold contracts on the Multi Commodity Exchange of India and COMEX today, analysts said.

 

The rupee's appreciation against the dollar also weighed on domestic prices of the precious metal. A firm rupee makes import of dollar-denominated commodities like gold cheaper.

 

At 1651 IST, the August gold contract was down 0.4% at 32,538 rupees per 10 gm and the same-month contract on COMEX was down 0.2% at $1,326.10 an ounce.

 

Gold contracts were in the red for the second straight day today as equity markets cheered the deal between the US and Mexico on immigration issues, stopping Washington from slapping trade tariffs on its neighbour. 

 

US President Donald Trump announced on Friday that tariffs would not be imposed on goods from Mexico as the two sides have reached a deal to avoid implementation of the tariffs, in an attempt to curb illegal immigration into the US. In return, Trump said Mexico had agreed to take "strong measures" to strengthen immigration enforcement.

 

Trump had last week threatened to impose 5% tariffs on all Mexican imports if the country didn't do more to stop illegal immigration into the US.

 

However, trade worries between the US and China continued as Trump has threatened to impose further tariffs on Beijing, "much higher than 25%" if President Xi Jinping does not meet him at the G20 summit in Japan.

 

Persistent worry about the global economy and trade relations may, however, limit the fall in prices of gold.

 

The upside in industrial metals on the LME propped up silver prices on COMEX. Most base metals on the LME rose today as market participants hope for rate cuts by the US Federal Reserve this year.

 

The July silver contract on MCX was flat at 36,575 rupees per kg and the same-month contract on COMEX was up 0.2% at $14.67 an ounce.

 

OUTLOOK

"Demand for gold should remain high thanks to the toing and froing in the various trade conflicts and the associated uncertainties…the latest upswing in the gold price is on shaky ground because it was driven to a large extent by speculation," a report by Commerzbank AG said.

 

For the rest of the day, gold contracts on MCX are seen in 32,493-32,797 rupees per 10 gm range. On COMEX, the contracts are seen in a range of $1,315.60-$1,337.50 an ounce.

 

Silver contract on MCX is seen at 36,318-37,074 rupees per kg, and at $14.56-$15.18 an ounce on COMEX.  End

 

US$1 = 69.44 rupees

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

 

Edited by Vandana Hingorani

 

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