MUMBAI – Gold futures on the domestic exchanges were trading higher as global prices touched a 10-week high and as the rupee weakened against the dollar, analysts said. On the COMEX, the weakness in global equity markets and concerns over emerging economies boosted the metal’s safe haven appeal.
However, some profit booking and caution ahead of the US Federal Open Market Committee’s two-day meeting ending Wednesday pulled down prices from multi-week highs.
At 1740 IST, the most-active February gold contract on the MCX was up 0.6% at 29,690 rupees per 10 gm. The same-month contract on the COMEX was 0.1% higher at $1,265.70 an ounce and touched a high of $1,279.80.
The rupee ended at the lowest level in 2014 so far at 63.10 per dollar as against 62.66 on Friday. A weak rupee makes imports expensive.
Gold futures have been finding support recently on hopes that the Federal Reserve will not further taper its stimulus measures given the current nervousness about emerging markets. In December, the US central bank trimmed its monthly asset purchases by $10 bln to $75 bln and the market then was expecting another round of tapering in the January meeting.
“Amid growing uncertainty on the financial markets and turbulence in the emerging economies, gold achieved a two-month high of $1,280 per troy ounce this morning. That said, the rising demand for gold in times of increasing risk aversion is not reflected in corresponding inflows into the gold ETFs,” said a report by Commerzbank AG.
“The robust physical gold demand in China that has lent support to the gold price in recent weeks, on the other hand, appears to be abating – that at least is what the falling physical premiums on the Shanghai Gold Exchange suggest.”
Gold holdings of SPDR Gold Trust fell 6.59 tn from last week to 790.46 tn on Friday, according to data on the website of the world’s largest gold exchange-traded fund.
Silver futures traded higher tracking rise in COMEX futures, where strength in gold supported prices, analysts said. The weak rupee also pushed up local prices of the precious metal.
The March silver contract was 0.7% up at 45,010 rupees a kg on the MCX, and the same-month contract on the COMEX was up 0.4% at $19.85 an ounce.