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Commodities Precious Metals

Gold and silver daily review (July 21, 2014)

July 21, 2014, Monday, 11:17 GMT | 06:17 EST | 14:47 IST | 17:17 SGT
Contributed by Angel Broking


Gold

Spot gold prices declined by 2 percent last week as receding fears over Portugal's banking sector and a gain in U.S. equities prompted investors to take profits after bullion's rally to 3-1/2 month highs last week. Portuguese bond yields fell last week after the country's biggest bank took steps aimed at reassuring investors of its stability, calming peripheral debt markets after their first episode of contagion this year.

Spot gold prices continued its decline over the week dropping below $1300 mark as bullion investors focused on a U.S. Federal Reserve monetary policy report showing the central bank is set to end its bond-buying stimulus in October.

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.

Strong U.S. economic outlook and fears that the Federal Reserve could raise U.S. interest rates limited gains for the safe haven. Gold prices touched a weekly low of $1291.7/oz before closing at $1310.6/oz on Friday.

In the Indian markets, gold prices declined by around 1.3 percent in the last week but sharp downside was limited owing to Rupee depreciation.


Silver

Weakness in gold prices as Portugal fears receded led to a bout of selling as spot silver prices declined by around 3 percent in the last week and closed at $20.8/oz. also, traders realized that the recent positive run in the metal is not going to last long spurred selling. In addition, strength in the dollar index and weakness in Nickel prices pushed the grey metal lower. On the MCX, silver prices declined by 2.5 percent taking cues from weak international markets and closed at Rs.44931/kg.


Outlook

On an intraday basis, we expect gold and silver prices to trade on a positive note aided by anticipation of increased geopolitical risks as the United States began demanding answers from Russia after a Malaysian plane was downed in eastern Ukraine. Also, increased concerns in Gaza along with spurt in SPDR holdings will support gains.

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

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