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India Bullion: MCX gold at 6-week low, COMEX silver nears 3-yr low

Wednesday, Nov 14

    By Shrikant Kuwalekar
    MUMBAI – Futures contracts of gold on the Multi Commodity Exchange of India fell to a six-week low of 30,620 rupees per 10 gm, as strength in the rupee against the greenback offset a steady trend on COMEX, analysts said. 
    At 1756 IST, the December gold contract on MCX was at 30,664 rupees per 10 gm, down 0.3% from Tuesday’s close, while the same-month contract on COMEX was almost unchanged at around $1,200 an ounce.
    The Indian currency hit near seven-week high of 72.0075 a dollar but ended at 72.3050, up 0.5% from the previous session.
    “Globally, gold is under pressure from a strong dollar, which touched a 17-month high on a trade-weighted basis earlier this week,” said Chirag Sheth of London-based precious metals consultancy Metals Focus.
    The dollar index was at 97.24 today, up 0.1%, recovering from a sharp fall on Tuesday. The index had hit a 17-month high on Monday.
   “Messy European politics, along with a Fed which is set to remain on its tightening trajectory, have kept the dollar index above 97, which continues to add to downside pressure on gold,” Canadian consultancy and brokerage house TD Securities noted in a report.
    Gold is also subdued due to fading safe-haven appeal amid resumption of talks between the US and China, “this time on a fairly high level…possibly laying the groundwork for discussion likely later in the month in Argentina”, Intl FCStone said.
    However, bargain hunting continues to limit the downside in gold prices, Commerzbank said. 
    Meanwhile, gold holdings with SPDR Gold Trust, the world’s largest exchange traded fund, fell by 0.85 tn on Tuesday.
    Silver futures on MCX were near a 10-week low of 36,172 rupees a kg, while at $13.87 an ounce, the parent contract on COMEX moved closer to a three-year low amid subdued demand.
    The gold-to-silver ratio today was at a 25-year high of 86:1, which means the price of 86 units of silver could fetch just one unit of gold.     

OUTLOOK
    “Gold is likely to be negatively impacted if dollar index strengthens further from current levels,” said Abhishek Bansal, chairman of ABans Group of Companies, adding gold could find support at $1,186 an ounce.
    On technical charts, support and resistance for the December gold contract on MCX is seen at 30,521 and 30,840 rupees, respectively, in the next couple of sessions.
    The December silver should trade in a range of 35,805-36,480 rupees a kg range for the rest of the session, said an analyst with a city-based brokerage house.  End   

US$1 = 72.3050 rupees
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Avishek Dutta

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