Gold futures opened higher and continued with the gains as the weakness in the Indian Rupee supported MCX gold and other commodities denominated in the local currency.
The Indian Rupee opened lower today on increased dollar purchases from companies and on choppy local equities and also slowdown in the Industrial production dragged on the currency.
The Index of Industrial Production grew 1.8% in December, sharply slowing down from 8.1% in the year earlier. Mining contracted 3.7%, manufacturing growth slowed to 1.8% and electricity grew 9.1%.
Consumer goods and basic goods grew 10% and 4%, respectively, while capital goods and intermediate goods contracted by 16.55% and 2.8%, respectively.
MCX April gold futures are trading up Rs 20 at Rs 28377 per 10 grams, hitting an intraday high of Rs 28418. A fall below Rs 28340 may drag it towards 28200 levels.
International gold futures however tumbled sharply pressured by the strong dollar. At the end of regular trading Thursday, the CME Group Inc. reduced the amount of collateral that traders must provide to trade commodities including gold, copper and crude oil. The margin required to open a position in gold futures was cut 12% to $10,125.
The cut in the margins was of no help for gold. Gold futures for delivery in April tumbled by $13 at $ 1728 levels on the Comex division of New York Mercantile Exchange. A fall below $1715 levels may take it below $1700 levels today.
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