Commodities

Gold and silver daily review (September 17, 2012)

Contributed by Angel Broking

Gold

Spot gold prices increased 2.1 percent on the back of upbeat global market sentiments after US Federal Reserve announced that it will expand its holdings of long term securities with open ended purchases of $40 billion mortgage based securities per month to boost the economic growth of the nation. The FOMC also said it would probably hold the federal funds rate near zero "at least through mid-2015."

The yellow metal touched a weekly high of $1,777.51/oz and closed at $1,771.98/oz on Friday. On the MCX, Gold October contract swung between gains and losses and declined 0.33 percent marginally during the week on the back of appreciation in the Indian rupee. Gold prices on the MCX closed at Rs.31,869/10 gms on day and touched a weekly low of Rs. 31,256/ 10gms. Gold prices had however touched a historical high of Rs.32,421/10 gms on Friday after the Federal Reserve announcement.

Silver

Spot silver prices gained 2.9 percent last week taking cues from strength in the gold prices along with firmness in the base metals pack. Weakness in the DX also acted as a supportive factor for the silver prices in yesterday's session. Gains were largely seen on Friday after announcement of QE3 by the US Federal Reserve in the Federal Reserve Open Market Commission meeting (FOMC) held on Thursday 13, 2012.

The white metal touched a weekly high of $34.92/oz and closed at $34.63/oz on Friday. In the Indian markets, MCX silver prices gained 0.28 percent taking cues from strength in the spot prices and closed at Rs. 64,243/kg after touching a weekly high of Rs.65,723/kg on Friday. Appreciation in the Indian rupee however capped sharp gains in the silver prices.

Outlook

In today's session, we expect precious metals to trade with positive bias due to upbeat global market sentiments and weakness in the DX. Also announcement by US Federal Reserve Chairman Ben S. Bernanke of buying $40 billion long term Mortgage Backed Securities (MBS) every month in the last week will support an upside in the prices. In the Indian markets appreciation in the Rupee will cap sharp gains in the MCX prices.