Commodities

Gold and silver daily review (February 22, 2013)

Contributed by Angel Broking

Gold

Spot gold prices bounced back from the lows due to short coverings and buying at lower levels and ended 0.9 percent down on Thursday. Prices however fell in the early part of the trade due to reports of liquidation by the hedge funds and also bearish sentiments created after US Federal Reserve official gave signals in the FOMC meeting minutes that they might discontinue the bond buying program or reduce it sooner than expected. Strength in the DX however, capped gains in the prices. Weak economic data from the US in yesterday's session also raised hopes that the Federal Reserve might maintain its stimulus measures reducing earlier concerns of discontinuing the same. This also pushed gold prices upwards.

The world's largest gold backed exchange traded fund New York's SPDR Gold trust witnessed its largest one day outflow. Its holdings drop by 20.77 tonnes due to sharp fall in the prices.

The yellow metal touched an intra-day high of $1,584.5/oz and closed at $ 1,575.7/ounce on Thursday. On the MCX, Gold April contract ended 0.6 percent higher taking cues from trend in the spot gold prices and depreciation in the rupee. Gold prices on the MCX closed at Rs.29,742/10 gms on Thursday after touching an intra-day low of Rs.29,779 / 10gms.

Silver

Spot silver gained 0.4 percent on Thursday taking cues from spot gold prices. Strength in the DX along with weakness in the base metals pack capped gains in the white metal. Short coverings by the market participants after sharp fall in the last few days pushed prices upwards. The white metal touched an intra-day high of $28.88/oz and closed at $ 28.64 per oz on Thursday. In the Indian markets, MCX silver prices gained 0.7 percent and closed at Rs.54,112 /kg on Thursday and touched a intra-day high of Rs.54,284/ kg. Silver prices on MCX traced strength of spot silver prices. Depreciation in the Indian rupee supported an upside in the silver prices on MCX.

Outlook

In the intraday, we expect precious metals to bounce back from the lows due to buying at lower levels. Apart from this there are hopes that US Federal Reserve might continue with the stimulus measures after observing unfavorable jobs data from the nation. Weakness in the DX is also expected to support an upside in the precious metals. In the domestic market, depreciation in the rupee is expected to add to the gains in the MCX precious metals.