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Commodities Precious Metals

Gold and silver daily review (March 20, 2014)

March 20, 2014, Thursday, 06:34 GMT | 02:34 EST | 11:04 IST | 13:34 SGT
Contributed by Angel Broking


Gold

Spot gold prices declined by 1.8 percent yesterday, its biggest one day drop in three months after comments from the Federal Reserve that it would continue to taper the asset purchase program and could start raising interest rates around six months later. In addition the strength in the dollar index also exerted downside pressure on prices.

Earlier in the session, gold came under pressure after Russian President Vladimir Putin signed a treaty on Tuesday making Crimea part of Russia again but said he did not plan to seize any other regions of Ukraine.

In the Indian markets, gold prices declined by 0.7 percent touching an intra-day high of Rs.30222/10 gms and closed at Rs.29981/10 gms on Wednesday.


Silver

Taking cues from fall in gold prices even silver prices declined by 1.1 investors chose to take profits after comments from the Federal Reserve to taper its bond buying program sending the metal lower. Strength in the DX also acted as a negative factor. The white metal touched an intra-day low of $20.50/oz and closed at $20.80/oz in yesterday’s trade.

Silver prices on the MCX declined by 0.4 percent yesterday and closed at Rs.45673/kg after touching an intra-day low of Rs.45227/kg.


Outlook

Gold has lost nearly 4 percent in the last three sessions, partly due to profit-taking after its rally on tensions over Ukraine. The U.S. central bank also proceeded with its reductions to its massive bond-buying stimulus, announcing it would cut its monthly purchases of U.S. Treasuries and mortgage-backed securities to $55 billion from $65 billion. A stronger dollar will also weigh on gold, with the dollar index jumping 0.7 percent yesterday. We expect gold to trade on weak note in today’s session. In the Indian markets rupee weakness will cushion the fall in gold prices.