Commodities

Gold and silver daily review (February 21, 2013)

Contributed by Angel Broking

Gold

Spot gold prices traded with a negative bias and ended 2.6 percent lower on the back of signs of global recovery in the key consuming nations. Apart from this worries amongst the market participants that the Federal Reserve may stop or slow its bond buying programme created bearish market sentiments. There were also reports of liquidation by the hedge funds which acted as bearish factor for the gold prices. Strength in the DX added to the losses in the spot gold prices.

The yellow metal touched an intra-day low of $1.558.24/oz and closed at $1,562.3/ounce on Wednesday. On the MCX, Gold April contract ended 1.6 percent lower taking cues from trend in the spot gold prices. Appreciation in the rupee also pulled the gold prices lower. Gold prices on the MCX closed at Rs.29,579/10 gms on Wednesday after touching an intra-day low of Rs. 29,505/ 10gms.

Silver

Tracing weakness in the spot gold prices, spot silver also fell 3 percent on Wednesday. Strength in the DX along with bearishness in the base metals pack also exerted a downside pressure on the silver prices.

The white metal touched an intra-day low of $28.26/oz and closed at $ 28.5 per oz on Wednesday. In the Indian markets, MCX silver prices declined 2.6 percent and closed at Rs. 53,720/kg on Wednesday and touched an intra-day low of Rs. 53,266/ kg. Silver prices on MCX traced weakness in the spot silver prices. Appreciation in the Indian rupee also acted as a bearish factor for the silver prices on MCX.

Outlook

In the intra-day, we expect precious metals to extend the losses of the previous day on the back of worries amongst the market participants over the continuation of the stimulus measures by the US Federal Reserve. The Fed officials remained divided over the issue. They might stop or slow down the program. Strength in the DX is also expected to weigh on the prices. In the domestic market, depreciation in the rupee is expected to cushion fall in the MCX Gold prices.