Commodities

Gold and silver daily review (January 31, 2013)

Contributed by Angel Broking

Gold

Spot gold prices extended gains of the previous day and ended 0.8 percent higher in yesterday's session. Prices rose as US Federal Reserve in its policy meeting said the policy makers might continue with its $85 billion bond buying program. They said that they would continue its stimulus plan until the jobs market improves substantially. This caused improved buying of the yellow metal as a hedge against inflation. Weakness in the DX also added to the gains in the gold prices.

The yellow metal touched an intra-day high of $1,683.39/oz and closed at $1,676.7 per ounce on Wednesday. On the MCX, Gold February contract ended 0.1 percent lower due to appreciation in the Indian Rupee. MCX gold prices closed at Rs. 30,217 per 10 gms on Wednesday after touching an intra-day low of Rs. 30,006 per 10gm.

Silver

Spot silver continued to add to the gains of the previous day and settled 2 percent higher in yesterday's session tracing strength in the gold prices along with weakness in the DX. Firmness in the entire base metals also pushed prices upwards. News of US Federal Reserve continuing its bond buying program pushed prices of the white metal higher. Appreciation in the Indian rupee however capped gains in the MCX silver prices.

The white metal touched an intra-day high of $ 32.23/oz and closed at $ 32.0 per oz on Wednesday. In the Indian markets, MCX silver prices gained 0.2 percent and closed at Rs. 59,061/kg on Wednesday and touched an intra-day high of Rs. 59,139/ kg. However, sharp gains in the white metal were capped due to appreciation in the rupee.

Outlook

In today's session, we expect precious metals to trade higher as US Federal Reserve continues its bond buying program until the jobs sector in the nation recovers. However, strength in the DX on account of more than expected decline in the US GDP might restrict gains in the precious metals. In the domestic markets, appreciation in the rupee is likely to cap gains in the precious metals on MCX.