Commodities

Gold and silver daily review (October 08, 2012)

Contributed by Angel Broking

Gold

Spot gold prices swung between gains and losses and increased 0.5 percent week on week. Initially selling pressure was witnessed in the beginning of the session due to renewed debt concerns of the Eurozone regi on with Spain becoming the focal point. Spain's Prime Minister denied to seek bailout until terms are clear. This created bearish market sentiments and caused risk aversion resulting in increased demand for the low yielding currency i.e. US dollar Index (DX). However, with ECB president Mario Draghi affirming that the bank is ready for the bond buying program once conditions are met eased debt concerns and created positive market sentiments. This erased earlier losses in gold. Further positive data from the US economy also supported an upside in the prices. Weakness in DX the later part of the week also acted as a supportive factor of the gold prices.

The yellow metal touched yearly high of $1,795.69/oz and closed at $1,780.48/oz on Friday. On the MCX, Gold October contract declined 1.25 percent on the back of appreciation in the Indian rupee. Gold prices on the MCX closed at Rs.31,167/10 gms on Friday and touched a weekly low of Rs. 31,180/ 10gms. Holdings in the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, surged 0.96 percent and stood at 1333.44 tonnes till October 05 2012 as against 1320.78 tonnes till September 28th 2012.

Silver

Spot silver prices ended on flat note and settled 0.03 percent week on week marginally up taking cues from strength in the gold and base metals prices along with weakness in the DX. The white metal touched a weekly high of $35.36/oz and closed at $34.47/oz on Friday. In the Indian markets, MCX silver prices fell 2 percent on the back of appreciation in the Indian rupee and closed at Rs. 61,732/kg after touching a weekly low of Rs.61,651/kg on Friday.

Holdings in the iShares Silver Trust, on a weekly basis witnessed a decline of 0.05 percent to 9920.18 tonnes till October 05, 2012 from previous week holdings of 9925.6 tonnes till September 28th 2012.

Outlook

In the intraday, we expect previous metals to trade with negative bias taking cues from weakness in the global markets along with strength in the DX. In the domestic markets depreciation in the Indian rupee will cushion sharp fall in the precious metals on the MCX.