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Commodities Precious Metals

Gold and silver daily review (May 06, 2014)

May 6, 2014, Tuesday, 04:56 GMT | 23:56 EST | 08:26 IST | 10:56 SGT
Contributed by Angel Broking


Gold

Extending the previous session’s gains, spot gold prices rose to three week high on escalating tensions in Ukraine and a break above the key $1300 mark. However, sharp gains in prices were capped as outflows from the top physical gold exchange-traded fund continued to indicate bearish sentiment. The SPDR Gold Trust, the world's largest gold ETF, said its holdings fell 2.70 tonnes to 782.85 tonnes on Friday, bringing its outflow for the week to nearly 10 tonnes.

Bullion's safe-haven appeal increased after news that a street battle between supporters and opponents of Russia in southern Ukraine over the weekend killed at least 42 people, including dozens of pro-Russian protesters incinerated in a burning building, bringing the country closer to war.

Further, contraction in Chinese manufacturing led to renewed concerns about a slowing economy in China also supported gold, and the market largely ignored a report showing upbeat U.S. service-sector activities.

On the MCX, gold prices gained marginally by 0.2 percent and closed at Rs.28935/10 gms taking cues from strong international markets.


Silver

Taking cues from strong gold prices in the international markets even spot silver prices gained by 0.4 percent. Besides, the escalating tensions in Ukraine appealed investors appeal for silver as an asset class and supported prices. However, slowdown in China raises concerns over industrial demand for silver from China and this can exert downside pressure on prices.

On the MCX, silver prices gained by 0.13 percent taking cues from strong international markets and closed at Rs.42596/kg.


Outlook

On an intraday basis we expect gold and silver prices to trade on a positive note on escalating geo-political tensions between Ukraine and Russia. Besides, contraction in Chinese manufacturing also increases bullions safe haven appeal and act as a positive factor.

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