Commodities

Gold and silver daily review (September 04, 2012)

Contributed by Angel Broking

Gold

Spot gold prices increased around 0.1 percent due to optimism that US Federal Reserve might adopt stimulus measures soon to boost the economy along with positive statement by the ECB president that the bank is comfo rtable buying 3 year bond to reduce the borrowing costs of the region. Additionally weakness in the US Dollar Index DX also sup ported an upside in the gold prices.

The yellow metal touched a high of $1,695/oz and closed at $1,691.79/oz in yesterday's session. On the MCX, Gold October contract increased by 0.1 percent tracking firmness in the spot gold prices. However, appreciation in the Indian rupee capped sharp gain in the gold prices. Gold prices on the MCX closed at Rs.31,283/10 gms on Monday after touching a high of Rs.31,422/10 gms yesterday.

Silver

Taking cues from rise in gold prices and upside in base metals pack, Spot silver prices gained by 1.3 percent in yesterday's trade.

Additionally, weakness in the DX also supported upside in the prices. The white metal touched an intra-day high of $32.3/oz and closed at $32.10/oz in yesterday's trading session.

In the Indian markets, prices gained by 2.3 percent on account of depreciation in the Indian Rupee and closed at Rs.59,719/kg after touching an intra-day high of Rs.60,963/kg on Monday.

Outlook

In today's session we expect precious metals to trade range bound with bullish tone on the back of expectations of stimulus measures from Federal Reserve coupled with weakness in the DX. Additionally, optimism statement from ECB President that central bank would be comfortable to buy three year government bonds to reduce the borrowing costs will also support upside in the prices.

While on the other hand, downgrade of the European Union outlook to negative by the Moody's credit rating agency can add downside pressure on the prices. In the Indian market appreciation in the Rupee can cap sharp gains in the prices.