Commodities

Gold and silver daily review (January 28, 2013)

Contributed by Angel Broking

Gold

Spot gold prices declined 1.5 percent week on week. Prices witnessed sel ling pressure on the back of liquidation by the market participants observing signs of global recovery which led to lower appetite towards the safe haven demand. Further, favorable data from the US also pushed prices lower. However, weakness in the DX cushioned fall in the gold prices.

Po stponement of debt ceiling issue by the US law makers till May 19, 2013 along with positive sentiments created after European Central Bank said that banks in the region might be able to re-pay more of its emergency three year loans in the coming week. This reduced safe haven buying of the yellow metal. Thus, the optimism that the Euro zone debt crisis is gradually being curtailed supported positive sentiments.

The yellow metal touched a weekly low of $1,655.39/oz and closed at $ 1658.31 per ounce on Friday. On the MCX, Gold February contract ended 0.9 percent lower tracing weakness in the spot gold prices along with appreciation in the rupee and closed at Rs. 30,331/10 gms on Friday after touching a weekly low of Rs. 30,258/ 10gm.

Silver

Spot silver fell 2.2 percent week on week. Silver prices traced sharp fall in the gold prices and erased earlier gains. Silver prices remained firm in the early part of the week due to firmness in the industrial metals along with weakness in the DX. Downward revision of global growth by the International Monetary Fund to 3.5 percent from 3.6 percent forecasted in the month of October 2012 also pushed prices of silver downside.

The white metal touched a weekly low of $ 31.09/oz and closed at $ 31.14 per oz on Friday. In the Indian markets, MCX silver prices fell 1.9 percent and closed at Rs. 58,250/kg on Friday and touched a weekly low of Rs. 59,436/ kg. Fall in the spot silver prices along with appreciation in the Indian rupee exerted downside pressure on silver prices on MCX.

Outlook

From the intra-day perspective, we expect precious metals to trade with a bearish note due to favorable data from the major nations indicating growth in the regions and thereby reducing the safe haven buying of the yellow metal. However, weakness in the DX might cushion fall in the prices of precious metals. Appreciation in the rupee is likely to exert downside pressure on the precious metals.