 "Gold erases early gains on profit booking")
After initial support, spot gold slipped in early Tuesday trade after dollar found strength amid concerns of a possible fall in the Russian gross domestic product (GDP).
The Russian rouble had hit an all-time low against the dollar at 53.89 on Monday as economic sanctions and low oil prices continued to hit its economy. On Tuesday, the Russian currency found support to gain some ground to trade at 51.38.
Spot gold hit $1,204 an ounce (oz) in late Monday trade, bouncing back from $1,146 an oz during the day after reports that the markets would focus on US non-farm payrolls. The European Central Bank’s hint on possible quantitative easing in the euro zone also supported the move as physical buying remains robust on low prices.
However, the metal lost ground marginally on profit booking and slipped below the broad-based cost of production level of $1,200 an oz.
“Spot gold prices are trading lower today by around one per cent at $1,195 an oz in early afternoon trade. Strength in the dollar, coupled with profit booking at higher levels, is exerting downside pressure,” said Prathamesh Mallya, senior research analyst at Angel Commodities Broking.
Normally, the price impact in the global markets gets reflected in the domestic spot market with a lag of one day. Hence, the Monday’s price spurt reported support in the physical market here. On Tuesday, standard gold closed with a gain of 1.15 per cent, or Rs 300, at Rs 26,500 for 10 gm in Mumbai’s popular Zaveri Bazaar.
Spot silver prices are also trading lower by 1.5 per cent at $16.17 an oz in tandem with the falling gold prices. The white precious metal closed with a gain of 2.78 per cent, or Rs 1,000, at Rs 37,000 a kg.
On the MCX, gold prices are trading lower by 1.5 per cent at Rs 26,501 for 10 gm as volatility in the international market caught traders by surprise.
“Strength in the dollar index and weakness in the base metals pack coupled with profit booking at higher levels is acting as a negative factor for prices,” said an analyst.
On the MCX, silver for near-month delivery is trading lower by 2.5 per cent at Rs 36,677 a kg.
Meanwhile, Citibank forecast gold to average at $1,220 an oz in 2015 on expected fall in both supply and demand of the yellow metal.
The bank estimates gold demand to stand at 4,189 tonnes in 2015 against a supply of 3,030 tonnes. Citibank said sustained fall in prices and rising cost of production create negative margins and cause producers to exit the market.
Base metals also declined with copper falling by 1.2 per cent on Tuesday as crude oil retreated and after a gauge of manufacturing strength fell to an eight-month low in China, the largest metals consumer. In addition, weak construction data from the UK exerted downside pressure on prices.
After hitting the level of $72.22 a barrel on Monday, brent crude declined 1.34 per cent to trade at $71.25 a barrel in early afternoon London trade.
Oil markets have been volatile in the recent weeks, although the negative trend dominates the asset class. Ample supplies from Opec (Organization of the Petroleum Exporting Countries) members as well as from the US coupled with Opec’s maintaining its status quo to cut crude output will exert downside pressure on the prices.
The Russian rouble had hit an all-time low against the dollar at 53.89 on Monday as economic sanctions and low oil prices continued to hit its economy. On Tuesday, the Russian currency found support to gain some ground to trade at 51.38.
Spot gold hit $1,204 an ounce (oz) in late Monday trade, bouncing back from $1,146 an oz during the day after reports that the markets would focus on US non-farm payrolls. The European Central Bank’s hint on possible quantitative easing in the euro zone also supported the move as physical buying remains robust on low prices.
However, the metal lost ground marginally on profit booking and slipped below the broad-based cost of production level of $1,200 an oz.
“Spot gold prices are trading lower today by around one per cent at $1,195 an oz in early afternoon trade. Strength in the dollar, coupled with profit booking at higher levels, is exerting downside pressure,” said Prathamesh Mallya, senior research analyst at Angel Commodities Broking.
Normally, the price impact in the global markets gets reflected in the domestic spot market with a lag of one day. Hence, the Monday’s price spurt reported support in the physical market here. On Tuesday, standard gold closed with a gain of 1.15 per cent, or Rs 300, at Rs 26,500 for 10 gm in Mumbai’s popular Zaveri Bazaar.
Spot silver prices are also trading lower by 1.5 per cent at $16.17 an oz in tandem with the falling gold prices. The white precious metal closed with a gain of 2.78 per cent, or Rs 1,000, at Rs 37,000 a kg.
On the MCX, gold prices are trading lower by 1.5 per cent at Rs 26,501 for 10 gm as volatility in the international market caught traders by surprise.
“Strength in the dollar index and weakness in the base metals pack coupled with profit booking at higher levels is acting as a negative factor for prices,” said an analyst.
On the MCX, silver for near-month delivery is trading lower by 2.5 per cent at Rs 36,677 a kg.
Meanwhile, Citibank forecast gold to average at $1,220 an oz in 2015 on expected fall in both supply and demand of the yellow metal.
The bank estimates gold demand to stand at 4,189 tonnes in 2015 against a supply of 3,030 tonnes. Citibank said sustained fall in prices and rising cost of production create negative margins and cause producers to exit the market.
Base metals also declined with copper falling by 1.2 per cent on Tuesday as crude oil retreated and after a gauge of manufacturing strength fell to an eight-month low in China, the largest metals consumer. In addition, weak construction data from the UK exerted downside pressure on prices.
After hitting the level of $72.22 a barrel on Monday, brent crude declined 1.34 per cent to trade at $71.25 a barrel in early afternoon London trade.
Oil markets have been volatile in the recent weeks, although the negative trend dominates the asset class. Ample supplies from Opec (Organization of the Petroleum Exporting Countries) members as well as from the US coupled with Opec’s maintaining its status quo to cut crude output will exert downside pressure on the prices.