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Commodities Precious Metals

Gold and silver daily review (August 04, 2014)

August 4, 2014, Monday, 04:47 GMT | 23:47 EST | 09:17 IST | 11:47 SGT
Contributed by Angel Broking


Gold

Spot gold prices fell last week as investors nervously awaited the end of U.S. Federal Reserve's two-day policy meeting on Wednesday to see if the central bank will raise interest rates faster than expected. Comments from Fed Chair Janet Yellen said earlier last month said that the central bank might raise rates sooner than expected if labor growth remained robust.

The Federal Reserve reaffirmed that it was in no rush to raise interest rates, even as it upgraded its assessment of the U.S. economy and expressed some comfort that inflation was moving up toward its target. After a two-day meeting, Fed policymakers took note of both faster economic growth and a decline in the unemployment rate, but expressed concern about remaining slack in the labor market.

The U.S. economy rebounded sharply in the second quarter as consumers stepped up spending and businesses restocked. Gross domestic product expanded at a 4 percent annual rate after shrinking at a revised 2.1 percent pace in the first quarter.

In the Indian markets, gold prices gained by around 0.42 percent in the last week and closed at Rs.28054/10 gms.


Silver

Silver prices in the international markets fell by around 1.89 percent taking cues from weakness in gold prices. Sharp decline in Nickel prices by more around 4 percent exacerbated the fall in silver prices.

On the MCX, silver prices gained by around 0.33 percent owing contrary to the decline in international markets and closed at Rs.44427/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. However, a word of caution as the NFP data released on Friday indicates stress in the labor market which can act as a positive factor for gold prices.

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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