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Commodities Precious Metals

Gold and silver daily review (August 01, 2014)

August 1, 2014, Friday, 06:59 GMT | 01:59 EST | 10:29 IST | 12:59 SGT
Contributed by Angel Broking


Gold

Spot gold prices declined by around 1 percent on Thursday as strong U.S. wage growth data and signs of an improving job market reduced the need for safe-haven buying. Bullion posted more a loss of nearly 3.5 percent for July, its biggest monthly loss this year, as the Federal Reserve's reduced bond-buying stimulus and a better undertone in the U.S. economy decreased the metal's appeal as a hedge.

On Thursday, the price of gold came under pressure after U.S. data showed labor costs recorded their biggest gain in more than 5-1/2 years in the second quarter, bolstering the economy's outlook. Gold prices were also dragged lower as U.S. crude oil tumbled to a more than four-month low under $10 a barrel due to a shutdown in a key refinery in Kansas that consumes the crude oil. Gold investors are also digesting news that Argentina defaulted for the second time in 12 years.

On the MCX, gold prices declined by around 0.42 percent and closed at Rs.27818/10gms.


Silver

Weakness in gold prices dragged silver prices too as prices declined by more than 1 percent and closed at $20.4/oz. Besides weakness in the base metals pack also led to the fall in prices.

On the MCX, silver prices declined by around 0.2 percent and closed at Rs.44399/kg.


Outlook

On an intraday basis, we expect gold and silver prices to trade on a negative note as Federal Reserve has reinstated its confidence in the US economy and reduced the bond buying stimulus decreasing the metals appeal. In addition, the improved labor markets and decline in oil prices will also exert downside pressure.

On the MCX, gold and silver prices are expected to trade on a negative note taking cues from weakness in international markets

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