Cogencis, Tuesday, Jan 1
By Roshni Devi and Shrea Paul
MUMBAI – Increasing worries about the global economy, worsened by a partial shutdown of the US government, and volatility in equity markets may keep gold prices elevated for the fourth straight month in January, traders and analysts said.
Gold futures on domestic bourses are seen moving in a range of 31,000-32,200 rupees per 10 gm in January, while on COMEX, prices are seen between $1,245 and $1,320 an ounce, according to 12 traders and analysts polled by Cogencis. Currently, gold prices on MCX are at around 31,405 rupees per 10 gm, while the most-active February gold contract on COMEX ended at $1,281.30 an ounce on Monday.
Gold contracts on MCX and COMEX rose nearly 4% in December.
The year 2018 was the worst for US equity markets in almost a decade, amid increasing worries of a global economic slowdown.
Expectations of the dollar weakening against the euro, and of only one rate hike by the US Federal Reserve this year are also likely to support gold.
"Gold may remain firm in the near term, above $1,242 per ounce following a correction in US equities and fragility in dollar index from the current level," Abhishek Bansal, chairman of ABans Group of companies, said.
Despite signs of progress in trade talks between the US and China, analysts are sceptical about the relations between the two largest economies. US President Donald Trump tweeted on Saturday that he had a long call with Chinese President Xi Jinping and that the deal was moving along "very well." He added that "big progress" was being made. A US delegation will travel to Beijing early this month for talks with Chinese counterparts, which is being seen as a sign of improving relations between the two largest economies.
Decline in consumer confidence and uncertainty over the shutdown of the US government are also likely to support gold. US consumer confidence dropped to 128.1 in December from 136.4 in November, the sharpest decline in more than three years, due to worries of weak economic growth and market volatility.
The US government's partial shutdown hit its 11th day today as US President Donald Trump and Democrats are stuck in a deadlock over federal spending for a wall along the US-Mexico border.
"Partial US government shutdown is expected to last until the US president's demand for funds to build a wall on the US-Mexico border is met; this is another factor that will continue to support gold on lower level," Navneet Damani, vice president of commodity research at Motilal Oswal Financial Services, said.
In India, high gold prices and the lack of auspicious dates are expected to keep physical gold demand subdued for the first half of the month, before it gathers pace after harvest festivals on Jan 14 and 15.
"It's off-season and also there is less liquidity in markets now and this is expected till the 15th at least. December gold imports were at 45-50 tn and imports in January will not exceed 50 tn," Prithviraj Kothari, director of RiddiSiddhi Bullions, said.
Oil prices are seen weakening this month, which may lead to appreciation in the rupee and limit the rise in local prices of gold, traders said.
||(rupees per 10 gm)
||($ per ounce)
|ABans Group of Companies
|East India Commodities
|Motilal Oswal Financial Services
|National India Bullion Refinery
US$1 = 69.46 rupees
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Maheswaran Parameswaran