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Commodities Precious Metals

Gold and silver daily review (August 06, 2014)

August 6, 2014, Wednesday, 06:02 GMT | 01:02 EST | 09:32 IST | 12:02 SGT
Contributed by Angel Broking


Gold

Drop in US equities and worries about escalation of military action in Ukraine helped gold prices gain in the early part of the session, while it closed at $1287.7, down by 0.02 percent. Bullion prices turned higher after Polish Foreign Minister Radoslaw Sikorski said Russia has gathered military forces at the border with Ukraine either to put pressure on the neighboring country or to enter it.

The metal initially fell after a report showed new orders for U.S. factory goods rose more than expected in June as demand increased across the board. Recent U.S. data pointing to strengthening economic activity has weighed on gold's appeal as a hedge for investors.

In the retail gold market, private-investor sentiment toward the metal in July recovered from the previous month's four-year low on rising geopolitical tensions, said a survey by online precious metals market BullionVault. In a measure of investor sentiment, SPDR Gold Trust , the world's largest gold-backed exchange traded fund, said its holdings fell 1.79 tonnes to 800.05 tonnes on Monday.

On the MCX, gold prices declined by 0.25 percent and closed at Rs.27844/10gms.


Silver

Spot silver prices declined by more than 2 percent on Tuesday on declining speculative interest in the metal. Besides, Perth Mint's coin sales of gold and silver dropped to a three-month low in July, according to the most recent data on its website exerted downside pressure on prices. Strength in the Dollar Index and weakness in the base metals pack also acted as a negative factor.

On the MCX, silver prices declined by around 1.7 percent and closed at Rs.43381/kg.


Outlook

On an intraday basis, we expect gold prices to trade sideways as escalation of geo-political tensions in Ukraine will boost the safe haven demand while encouraging economic data from the US in the recent weeks suggests that growth in the world’s largest economy is gaining traction exerting downside pressure on prices.

On the MCX, gold prices are expected to trade sideways taking cues from sideways trade in the international markets.