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Commodities Precious Metals

Gold and silver daily review (May 26, 2014)

May 26, 2014, Monday, 07:26 GMT | 03:26 EST | 11:56 IST | 14:26 SGT
Contributed by Angel Broking


Gold

Rising equities in the US and gold prices trading below the key $1300 mark pressurized prices further as bullions safe haven appeal has been reducing by rise in other asset class. Besides, lack of investment demand and soft physical demand also exerted downside pressure on prices. Report from the World Gold Council said last week that consumer gold demand in the world's biggest buyer China fell 18 percent to 263.2 tonnes, with Chinese demand for gold coins and bars down 55 percent in the first quarter, offset only partially by a 10 percent rise in jewellery off take. Indian consumer demand was down by just over a quarter to 190.3 tonnes, although a drop in sales from bullion-backed investment funds kept overall demand steady.

In the Indian markets, gold prices declined by 2.63 percent in the last week due to on ease of import restriction by the central bank. Gold prices touched a weekly low of Rs.27100/10 gms before closing at Rs.27349/10 gms on Friday.


Silver

Spot silver prices gained marginally in the last week taking flat cues from international gold prices. However, strong gains in Nickel prices by more than 3 percent also supported prices.

Sharp gains in the domestic markets were capped on weakness in gold prices as RBI eased import norms and allowed seven more banks to import gold.

In the Indian markets, prices declined by 0.24 taking cues from weakness in domestic gold prices. Silver prices on the MCX made a weekly low of Rs.40575/kg, and closed at Rs.40797/kg.


Outlook

On an intraday basis, we expect gold prices to trade lower as physical demand seems to be weak across global and Asian markets. Besides outflows from the SPDR continues to have negative influence on the investors exerting downside pressure on prices. Also, the Fed’s minutes stated that bond buying programme will soon come to an end although the time frame was not decided when the Fed will do it. In addition, prices will continue to be under pressure till the time it trades below the key threshold of $1300 mark.

In the Indian markets, ease of import norms will make gold supplies ample in the gold market reducing the premium to import gold. On the MCX, gold prices are expected to trade weaker taking cues from international markets.

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