New York: 21:52 || London: 02:52 || Mumbai: 06:22 || Singapore: 08:52

Commodities Precious Metals

Gold and silver daily review (June 23, 2014)

June 23, 2014, Monday, 06:03 GMT | 01:03 EST | 09:33 IST | 12:03 SGT
Contributed by Angel Broking


Gold

The yellow metal has gained grounds once again in the recent weeks and rose nearly 6 percent this month. The rise was partly due to rising violence in Iraq and lingering tensions over Ukraine lifting bullions safe haven appeal. Comments from the US that it could launch air strikes to support the Iraqi government after a rampage by Sunni Islamist insurgents led to the rally. Government forces continued to battle Sunni militants for control of Iraq's biggest refinery as U.S. President Barack Obama said the United States will send up to 300 military advisers to Iraq to combat the extremist insurgency.

On the flip side, the central bank slashed its forecast for U.S. economic growth to a range of between 2.1 percent and 2.3 percent from an earlier forecast of around 2.9 percent. The Fed also reduced its monthly asset purchases from $45 billion to $35 billion. Although high reading for U.S. inflation has raised expectations the Fed might signal a sooner-than-expected rise in interest rates. Tightening rates would also lift the dollar and put pressure on dollar-priced commodities like gold. However, lack of interest by the Fed members to raise the interest rates and slow momentum in the US economy has acted as a trigger for traders to push the precious metals higher.


Silver

Silver prices rose by 6.3 percent in line with strength in bullion prices. Strength in the copper prices and renewed interest by the speculators acted as a positive factor. Although dollar index traded higher by 0.1 percent silver prices rose in line with the fundamentals and the geo-political tensions and escalating violence in Iraq. On the MCX, silver price rose by 6.4percent and closed at Rs.44570/kg.


Outlook

On an intraday basis, we expect gold and silver prices to trade sideways with lack of cues from the US with no high impact economic data events to be released throughout the day. Fed’s lack of interest to raise interest rates and slow momentum in the US economy will act as a trigger for traders to push the precious metals higher in the coming weeks. On the MCX, gold and silver price are expected to trade sideways in line with international markets.