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Commodities Precious Metals

Gold and silver daily review (August 21, 2014)

August 21, 2014, Thursday, 05:47 GMT | 01:47 EST | 10:17 IST | 12:47 SGT
Contributed by Angel Broking


Gold

Spot gold prices decline on Wednesday on strength in the dollar index on economic optimism after the minutes of the Federal Reserve's latest meeting showed the U.S. central bank has seen progress in the U.S. labor market.

The Federal Reserve has been surprised by how quickly the U.S. labor market is healing but does not want to bring forward a planned rate hike until the recovery looks more convincing, according to minutes of its last policy meeting in late July.

Bullion investors will now turn their focus to Friday, when Federal Reserve Chair Janet Yellen will address an annual gathering of policymakers in Jackson Hole, Wyoming.

On the MCX, gold prices declined 0.14 percent and closed at Rs.28212/10 gms.


Silver

Spot silver prices gained by 0.1 percent contrary to the fall in gold prices as investors weighed down the possibility of interest rate hikes in the US. Although the labor markets is showing signs of improvement it would take longer time for Fed to convincingly wind down its bond buying programme.

Besides, strength in copper prices lifted the metals appeal as prices in the domestic markets gained by 0.2 percent and closed at Rs.42341/kg


Outlook

On an intraday basis, we expect gold and silver prices to trade on a weak note as the Fed has reinstated confidence and optimism in the US economy exerting downside pressure. Besides, the investors interest in gold as an asset class is declining as indicated by outlflows from the SPDR gold trust in the recent week.

Growth in the labor market is also an indication of optimism in the US economy which can act as a negative factor for prices.

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