Disparity Between Mcx and Comex Gold

Gold December futures ended the day at $1271.20, down by 0.77% while gold prices at the local market ended at Rs 30,411, up by 0.89%. Yesterday, we talked about the disconnect between MCX and COMEX gold prices. A similar trend was noticed and is likely to continue in today’s trade as well. We recommend selling COMEX gold contracts while buying MCX gold futures for the day. As long as the rupee continues to trade weak and spot demand remains higher, we may see local gold prices remain elevated while hedge funds are highly hesitant about gold trading and so, it is possible that global gold prices may remain short.

This morning, gold is trading at $1269.60, down by mere $1.50. We believe that gold may continue to trade down globally since the positive correlation with euro has once again spoiled. However, the euro-zone industrial production data due today is expected to stay lower and so, any strong bearish pressure on the euro might help the gold trade lower. Meanwhile, we refrain from suggesting selling local gold futures contracts as the rupee continues to trade weak against the US dollar while the spot demand is also high. So, we continue to maintain a divergent view on COMEX and MCX gold prices for the day. However, if the rupee recovers slightly from its intraday low, we might see gains in gold prices at the local market fading.

In the last week, gold holdings improved a tad from 866.32 to 868.42 tons at the SPDR gold trust and has been maintaining the same number this entire week, indicating a lack of fresh demand for gold. In fact, hedge funds across the globe are a bit jittery about the gold trading. In light of this, gold may remain lower and, the currently existing disconnect at the local market may remain intact. However, in the near future, local prices may also turn down.

Silver also traded down yesterday to settle at $20.778, down by 2.37%. However, silver prices fell more than gold due to the weakness in the industrial metals and the negative equities across the globe. We had also suggested a ratio view yesterday, wherein we recommended buying gold and selling silver. The ratio has moved up from 61.18 to 61.31. At the local market, silver’s December futures prices ended the day at Rs 47,750, down by more than Rs 1000. We believe that silver may continue to trade down.

This morning, silver December futures at the globex platform are trading at $20.70, down by 0.38% and so, silver may open lower while the rupee is currently trading at 63.98, down by 8 paisa. So, a marginal appreciation of rupee might also extend the fall in silver prices for the day.

We continue to hold a bearish view on silver. The weakness in base metals and equities may also pressure silver to remain lower. So, we recommend selling silver for the day. We also suggest a ratio trade where we recommend buying gold and selling the silver futures contract for the day.

COMMODITY INTRADAY TIPS

SELL LEAD MCX NOV NEAR 134 SL 135 TGT 133

SELL SILVER MCX DEC NEAR 47380 SL 47600 TGT 47050

ECONOMIC INDICATORS:

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