Commodities

Gold and silver daily review (January 21, 2013)

Contributed by Angel Broking

Gold

Spot gold prices gained 1.3 percent week on week on the back of inc reased physical buying by the Asian customers particularly China ahead of new year in February. Apart from this, disagreement amongst the US law makers over increasing the debt ceiling raised concerns. Thus, this un certainty led to increase in the safe haven buying of the gold. Hopes of positive data from China also supported an upside in the gol d prices. Strength in the DX however capped gains in the gold prices. Gains were also erased on Friday after unfavorable US consumer sentiment data.

The yellow metal touched a weekly high of $ 1,695.56 /oz and closed at $ 1,683.34 per ounce on Friday. On the MCX, Gold February contract ended 0.5 percent lower due to appreciation in the currency. Gold prices on the MCX closed at Rs. 30,594/10 gms on Friday after touching a low of Rs. 30,530/ 10gms.

Silver

Spot silver prices gained 4.6 percent week on week taking cues from firmness in spot gold prices coupled with strength in the base metals pack. Rise in the silver holdings in the biggest ETF of the metal also pushed prices of the silver upwards. However, strength in the DX capped gains in the silver prices on MCX. Worries over the global growth also restricted sharp gains in the white metal prices.

The white metal touched a weekly high of $ 32.11 /oz and closed at $ 31.84 per oz on Friday. In the Indian markets, MCX silver prices ended 2.3 percent higher tracing strength in the spot silver prices. However, sharp gains in the MCX silver were capped due to appreciation in the rupee in last week. MCX Silver prices closed at Rs. 59,436 /kg on Friday and touched a weekly high of Rs. 59,787 / kg.Assets in iShares Silver Trust, the biggest exchange-traded fund for the metal, climbed the most in five years as more investors are seeking an alternative to gold. Holdings jumped 572 metric tons, or 5.9 percent, the biggest increase since December 2007, according to data on the iShares.

Outlook

In the intra-day we expect precious metal to trade with upward bias due to mixed global market sentiments along with weakness in the DX. Signs of progress amongst US policy makers over the debt ceiling issue are expected to support an upside in the gold prices. Apart from this expectation of further stimulus measures to be announced by the Bank of Japan is expected to push precious metals prices upwards. In the domestic market, appreciation in the rupee is expected to cap gains in the precious metals on MCX.