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Commodities Precious Metals

Gold and silver daily review (May 13, 2014)

May 13, 2014, Tuesday, 05:28 GMT | 00:28 EST | 08:58 IST | 11:28 SGT
Contributed by Angel Broking


Gold

Gold prices rose on Monday on increasing tensions in Ukraine that prompted safe haven buying, but lack of strong physical demand could cap sharp gains in prices. The yellow metal rose briefly above the $1300 mark after pro-Moscow rebel leaders in eastern Ukraine called for their region to become part of Russia after declaring victory in a weekend referendum on self-rule, a move that could drag the country into war.

However, rising US equities with S&P moving within 1 percent of its record high capped the gains in the metal. Subdued buying in the physical markets hurt sentiment towards gold. In top buyer China, local premiums over the global benchmark rose slightly, but they are still much lower than the over-$20 premiums seen earlier in the year. China's weakening demand for physical metals was reflected by a 44 percent year-over-year fall in the demand of gold bars in the first quarter, according to data by the China Gold Association.

On the MCX, gold prices rose by 0.36 percent and closed at Rs.28628/10gms.


Silver

Spot Silver prices rose by 2.1 percent tracking cues from strength in gold prices coupled with gains in the base metals complex. Besides, rising tensions in the Ukraine has lifted appeal for silver as an asset class acting as a positive factor.

On the MCX, silver prices rose by 1.5 percent and closed at Rs.42086/kg.


Outlook

On an intraday basis we expect gold and silver prices to trade on a mix note as escalating tensions have once again lifted bullions safe haven appeal while the weak physical markets and decline in holdings in the SPDR trust indicates investors losing interest in the metal. Meanwhile, investors will watch out for the economic data sets to be released from China for further cues. Also, Chinese demand for gold bars has declined by 44 percent in the first quarter also suggests that any rally in the precious metal will be a temporary phenomena.

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

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