Commodities

Gold and silver daily review (September 20, 2012)

Contributed by Angel Broking

Gold

Spot gold prices swung between gains and losses and ended on a flat note. Prices initially witnessed a sharp rise and touched 6-1/2 month high taking cues from firm global market sentiments after Bank of Japan announced its plan to expand the asset program by 10 trillion yen ($126 billion) to recover its economy from the slow down. Further, positive economic data from the US led prices to remain firm. But long liquidation towards the end led prices to end on a flat note. Weakness in the DX also supported am upside in the gold prices.

The yellow metal touched a intra-day high of $1,779.10/oz and closed at $1,769.19/oz on Wednesday. On the MCX, Gold October contract gained 0.3 percent tracking firmness in the spot gold prices. Gold prices on the MCX closed at Rs.32,040/10 gms after touching a high of Rs. 32,095/ 10gms in yesterday's session

Silver

Spot silver prices declined 0.7 percent taking cues from mixed movement in the gold prices. However, weakness in the DX along with strength in the base metal pack cushioned sharp fall in the silver prices in yesterday' session. Initially gains were witness after Bank of Japan announced its stimulus measure to bring recovery in the nation.

The white metal touched a intra-day low of $34.25/oz and closed at $34.53/oz on Wednesday. In the Indian markets, MCX silver prices ended on a flat note and closed at Rs. 64,495/kg after touching a low of Rs.64,132/kg on Wednesday.

Outlook

We expect precious metals to trade on a bearish note on the back of weak global market sentiments along with strength in the DX. Doubts that stimulus measures announced by the central bankers might not be enough to revive the economy will also pressurise prices on the downside. In the domestic markets depreciation in the Indian rupee is however expected to cushion sharp fall in the prices on MCX.