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Commodities Precious Metals

Gold and silver daily review (July 17, 2014)

July 17, 2014, Thursday, 07:10 GMT | 02:10 EST | 10:40 IST | 13:10 SGT
Contributed by Angel Broking


Gold

After two consecutive days of sharp declines, Gold rebounded on Wednesday as sharp declines gave an opportunity for bargain buying supporting prices. However, strong U.S. economic outlook and fears that the Federal Reserve could raise U.S. interest rates limited gains for the safe haven. U.S. manufacturing output rose at its fastest pace in more than two years in the second quarter, suggesting the economy was regaining enough momentum to lift growth throughout the year.

The metal broke below $1,300 for the first time since June 19 on Tuesday after a Fed report showed its balance sheet would top out at $4.5 trillion when its bond-buying program ends in October - a timeline consistent with what Fed policymakers had said previously. Gold's gains also fizzled after Dallas Fed President Richard Fisher said on Wednesday the central bank is "likely" to start raising interest rates gradually early next year and should begin shrinking its massive balance sheet in October to signal its confidence in the recovery.

On the MCX, gold prices gained marginally by 0.1 percent and closed at Rs.27676/10 gms.


Silver

Spot silver prices rose by 0.1 percent taking cues from strength in gold prices .However, strength in the dollar index and weakness in the base metals complex capped the rally.

On the MCX, silver prices declined by 0.6 percent and closed at Rs.44577/kg in contrary to the gains in international markets.


Outlook

On an intraday basis, we expect gold and silver prices to trade sideways as prices have been seesawing between gains and losses in the past few sessions. On one hand, the optimism in the US economy is brightening the growth trajectory while comments from the Fed policy maker Fed fisher hinted that interest rates might rise gradually early next year can exert downside pressure on prices.

On the MCX, gold and silver prices are expected to trade sideways in today’s trade. Meanwhile, the housing data set to be released from the US tonight will set the tone for prices in the coming session.