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Commodities Precious Metals

Gold and silver daily review (April 23, 2014)

April 23, 2014, Wednesday, 05:57 GMT | 00:57 EST | 09:27 IST | 12:57 SGT
Contributed by Angel Broking


Gold

Gold prices continues its fall in a consecutive second session and drops to the lowest in more than two months on outflows from the gold ETF’s pointing towards weak investment appetite. Besides gains in US equities also exerted downside pressure on prices. The SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, reported another drop in holdings on Monday, down 3 tonnes to 792.14 tonnes. Last week alone, fund outflows totaled 9.3 tonnes, erasing all the gains made in the year.

Bullion fell for a fourth straight day after government data showed U.S. home prices rose in February, while a report by the National Association of Realtors showed existing home sales were a bit stronger than expected.

On the MCX, gold prices declined taking cues from weakness in international gold prices, however rupee weakness cushioned sharp fall in prices.


Silver

Taking cues from weakness in gold prices even spot silver prices declined by 0.2 percent in yesterday’ session although the base metals pack on the LME traded positive. Silvers appeal as an asset class has been declining for quite some time now as growth in the US economy is leading to investors changing their portfolios towards equity and other risk assets.

On the MCX, silver prices traded positive on account of rupee weakness and gained marginally by 0.5 percent and closed at Rs.42236/kg.


Outlook

On an intraday basis, we expect gold and silver prices to trade on a negative note on a better U.S. economic outlook, reflected by a six straight day of gains in the S&P 500 stock index, driven by strong corporate results, reducing gold's appeal as a hedge. Also, persistent outflows from the top ETF could make any gains hard to hold. Meanwhile, upcoming U.S. economic indicators, including new home sales tonight and the durable goods orders and jobless claims on Thursday, are likely to set the tone for gold in the near term.