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India Bullion: Tad down tailing COMEX, trade thin as US markets shut

Cogencis, Monday, Jan 21

By Shrea Paul

MUMBAI – Gold contracts on domestic as well as global exchanges fell marginally today as investors were cautious on developments related to the US-China trade dispute, analysts said, adding that global equitites offered mixed cues.

Volumes are likely to remain thin today due to a holiday in the US on account of Martin Luther King Jr Day.

According to reports, a tariff rollback may be discussed in a meeting between US Treasury Secretary Steve Mnuchin and Chinese Vice-Premier Liu He by the end of this month. However, US President Donald Trump has denied such reports but said that there has been progress towards a deal with China.

Dovish remarks from US Federal Reserve officials have raised expectations of a pause in the rate hike cycle, which is seen limiting any sharp fall in prices.

"The focus is shifting towards Federal Reserve meeting on Jan 29-30," said Abhishek Bansal, chairman of ABans Group of Companies.

"The Federal Reserve has already sent a clear signal that it won't be moving quickly to raise interest rates in 2019 and low rates are helping gold."

At 1730 IST, the February gold contract on the Multi Commodity Exchange of India was down 0.2% at 32,031 rupees per 10 gm, and the same-month contract on COMEX was down 0.4% at $1,277.9 an ounce.

Investors will watch for developments related to Brexit as UK Prime Minister Theresa May will later today present a revised plan for the country's exit from the European Union after the first deal was rejected in the UK Parliament last week.

"We are confident that it will soon recoup these losses – ETF inflows should help… Gold could already find itself in increased demand today if the UK prime minister's 'Plan B' for Brexit turns out to contain nothing new and the chaos continues," Commerzbank AG said in a report.

Gold holdings with SPDR Gold Trust jumped by 12.05 tn on Friday to 809.76 tn, the highest since Jun 29, data on the website of the world's largest gold exchange-traded fund showed. This was the largest single-day increase in nearly a year and a half. A rise in assets shows increased investor interest for the precious metal.

Silver contracts also fell today, tracking weakness in gold as well as base metals contracts. Silver is an industrial metal, and as such, takes cues from the base metals complex.

The March silver contract on MCX was down 0.7% at 38,927 rupees per kg, and the same month's contract on COMEX was down 0.9% at $15.255 an ounce.

OUTLOOK

For the rest of the day, gold contracts on the MCX are seen trading at 31,800-32,350 rupees per 10 gm, and the same-month contract on COMEX is seen at $1,269-$1,291 an ounce, according to a report by Angel Commodities.

The silver contract on MCX is seen at 38,500-39,900 rupees per kg, and at $15.00-$15.60 on COMEX.  End

US$1 = 71.28 rupees

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

Edited by Akshit Harsh

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