By Amar Singh, Reena Walia Nair (Angel Broking)

MARKET RECAP

Spot Gold prices lost 1.4% in the last week as strength in the dollar made the yellow metal look unattractive for holders of other currencies. Gold prices took cues from the movement in the dollar. Also, risk aversion in the markets led to a sell-off in commodities across the board. Spot Gold prices have slipped below the crucial $1100/oz mark and touched a low of $1043/oz in the last week. Spot Silver prices on the other hand declined a whopping 6.5% in the last week. Silver prices declined more than gold as the metal not only takes cues from gold and the dollar but also from the base metals as silver is used for industrial purposes. Hence, the white metal slipped sharply in the last week touching a low of $14.63/oz. Demand for the low-yielding dollar has increased as it crossed the psychological mark of 80 yesterday. If risk aversion continues to persist in the financial markets then the dollar could continue to strengthen and put pressure on prices of dollar-denominated commodities.

OUTLOOK

We expect Gold prices to trade with a negative bias on the back of:
-      Strength in the US dollar, which is currently trading above the 80 mark.
-      Risk aversion in the financial markets that could lead to a sell-off in equities and commodities.

On intraday basis, Spot Gold prices have immediate support at $1059/$1045 whereas resistance is seen at $1074/$1084. Spot Silver prices shall find support at $14.92/$14.57 whereas resistance is seen at $15.39/$15.80.