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Commodities Precious Metals

Gold and silver daily review (August 22, 2014)

August 22, 2014, Friday, 05:07 GMT | 00:07 EST | 08:37 IST | 11:07 SGT
Contributed by Angel Broking


Gold

Spot gold prices declined by around 1.16 percent on Thursday to its lowest in two months extending losses to a fifth consecutive session, as fears about an early interest rate hike by the U.S. Federal Reserve sparked a technical selloff after prices broke below a key support level.

Prices declined further after minutes from the Fed's July meeting on Wednesday showed policymakers debated whether interest rates should be raised earlier given a surprisingly strong job market recovery. Yesterdays encouraging U.S. housing and jobs data also stirred economic optimism, pressuring gold.

Investors largely ignored data showing holdings in the SPDR Gold Trust GLD, the world's largest gold-backed exchange-traded fund, rose 0.9 tonne to 800.09 tonnes on Wednesday, the third straight daily increase.

On the MCX, gold prices declined by around 1.65 percent and closed at Rs.27747/10gms.


Silver

Weakness in gold prices dragged silver prices too as profit booking at higher levels and weakness in the base metals pack led to the decline.

On the MCX, silver prices declined by around 0.6 percent and closed at Rs.42080/kg.


Outlook

On an intraday basis, we expect gold and silver prices are expected to trade lower as Fed’s optimism in the US economy on the basis of strength in labor markets and fears of sooner or later hikes in the interest rates dragged prices. The next focus for the market will be Fed Chair Janet Yellen's comments at the Jackson Hole central bankers' gathering on Friday.

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