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Commodities Precious Metals

Gold and silver daily review (May 19, 2014)

May 19, 2014, Monday, 07:05 GMT | 02:05 EST | 10:35 IST | 13:05 SGT
Contributed by Angel Broking


Gold

Spot gold prices started the week on a positive note and rose to three week high on escalating tensions in Ukraine and a break above the key $1300 mark. However, rising US equities with S&P moving within 1 percent of its record high last week capped sharp gains in the metal. The yellow metal was also pressurized as US bond yields hit a one year low coupled with reports that the ECB is going to do the rate cut next month is more or less a done deal.

Also, new applications for U.S. unemployment benefits hit a seven-year low last week while consumer prices in April recorded their largest increase in 10 months. Spate of good data from US is also exerting downside pressure on prices. Subdued buying in the physical markets hurt sentiment towards gold. 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. Also, in top buyer China, local premiums over the global benchmark are still much lower than the over-$20 premiums seen earlier in the year.


Silver

Taking cues from gains in gold and base metal prices even spot silver prices gained 0.8 percent. However, strength in the DX prevented sharp upside in prices.

On the MCX, silver prices declined by around 1.3 percent owing to Rupee appreciation and closed at Rs.40894/kg.


Outlook

On an intraday basis, we expect gold and silver prices to trade on a mixed note as the economic data released from the US is painting bright picture about the economy.

While on the other hand, improving trend in SPDR holdings along with weakness in the DX will cushion sharp downside or even reversal in prices.

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