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Commodities Precious Metals

Gold and silver daily review (July 14, 2014)

July 14, 2014, Monday, 05:26 GMT | 00:26 EST | 09:56 IST | 12:26 SGT
Contributed by Angel Broking


Gold

Spot gold prices started the week in a low note on expectations of an early interest rate hike by the FED. The dollar index also neared a two week high after a government report showed that the US jobless rate was near a 6 year low suggesting bright economic prospects. However, the U.S. Federal Reserve's latest meeting minutes did not suggest any hike in U.S. interest rates soon. The Fed may end its bond buying program after its October meeting if "certain economic conditions remain positive".

On the flip side, prices gained momentum after questions were raised about the health of Portugal's top-listed bank sparked worry that a new euro zone banking crisis might be in the offing. This lead to safe haven appeal for gold.

Espirito Santo Financial Group, the largest shareholder in Portugal's Banco Espirito Santo, suspended trading in its shares and bonds, citing "material difficulties" at parent company ESI. It was the first significant episode of contagion for European peripheral markets this year, and it curbed demand at Greece's second debt sale following its 2012 default.

In the Indian markets, gold prices gained by around 3 percent in the last week. Gold prices touched a weekly high of Rs.28589 gms before closing at Rs.28356/10 gms on Friday.


Silver

Silver prices rose largely tracking gains in bullion prices as the contagion in the Euro zone with problems in Portugal escalating has raised the safe haven appeal. Strength in the base metals complex (except Nickel) also led to the gains in silver prices.

On the MCX, silver price rose by 3.2 percent and closed at Rs.46068/kg


Outlook

On an intraday basis, we expect gold and silver prices to trade higher as escalation of Portugal situation has appealed bullions safe haven status. The Euro area crisis is now in the forefront again and the contagion is likely to disturb the growth scenario in the region acting as a positive factor.

On the MCX, gold prices are expected to trade on a positive note taking cues from international markets.

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