 "Selling pressure to pull gold further down")
Heavy selling pressure emerged in bullion after the dollar index pushed sharply higher to a 13-month high on favourable American unemployment data, indicating a recovery in the world’s largest economy.
Bullion markets had already factored in the announcement on quantitative easing (QE) announced by Mario Draghi, president of the European Central Bank (ECB). The ECB cut in the interest rate to nearly zero, at 0.005 per cent, had negligible impact on gold and silver on Thursday.
Abroad, gold for delivery in December fell marginally by $4 to $1,266.30 an oz on the COMEX. Silver fell by $0.074 to $19.115 an oz in Thursday evening trade. The fall in late Thursday evening trade in global markets had a similar impact on the Indian market. Gold for near-month delivery on the Multi Commodity Exchange (MCX) fell to $27,361 per 10g before a mild recovery to Rs 27,400 per 10g towards the end of the morning session.
“Gold is under severe selling pressure. The metal has entered into a bear phase, due to investors’ bullish sentiment towards the equity market. Funds are taking money out of commodities to invest in alternative instruments linked with equity markets. The next resistance level gold can see is at $1,240 an oz and then $1,200 an oz,” said Gnanasekar Thiagarajan, Director, Commtrendz Research.
This means gold has a further decline potential of at least five per cent from the current level. Noticing the downward sentiment, HSBC on Tuesday forecast gold to move in a range of $1,150 to $1,350 an oz during the rest of 2014, in a market “searching for a new equilibrium”, with a number of offsetting factors. It maintained its 2014 average price forecast at $1,292 an oz and listed 2015 and 2016 forecasts of $1,310 and $1,345 an oz, respectively.
“Gold and silver are likely to trade lower, as growth in the US economy will lead to a decline in investor interest,” said Prathamesh Mallya, senior research analyst (non-agri commodities), Angel Broking.
Spot silver prices are trading higher, taking cues from a positive movement in gold prices and trading at $19.09 an oz. Weakness in the dollar index and technical buying is supporting prices. However, weakness in the base metals pack is capping the rally. On the MCX, silver prices are trading higher by 0.2 per cent and trading at Rs 41,578 a kg.
At Rs 27,600 per 10g, gold remained range-bound at the spot market here in Zaveri Bazaar.
Further, the European Central Bank cut interest rates to a record low on Thursday and launched a new scheme to push money into the flagging euro zone.
“When the United States announced QE, analysts feared an inflationary concern. But, that did not happen. Now, there is no such fear even today after the ECB announced QE. More than the dollar’s strength, it is the euro which is weakening. Hence, the dollar’s strengthening is natural,” said Thiagarajan.
At Rs 27,600 per 10g, gold remained range-bound at the spot market here in Zaveri Bazaar.
Bullion markets had already factored in the announcement on quantitative easing (QE) announced by Mario Draghi, president of the European Central Bank (ECB). The ECB cut in the interest rate to nearly zero, at 0.005 per cent, had negligible impact on gold and silver on Thursday.
Abroad, gold for delivery in December fell marginally by $4 to $1,266.30 an oz on the COMEX. Silver fell by $0.074 to $19.115 an oz in Thursday evening trade. The fall in late Thursday evening trade in global markets had a similar impact on the Indian market. Gold for near-month delivery on the Multi Commodity Exchange (MCX) fell to $27,361 per 10g before a mild recovery to Rs 27,400 per 10g towards the end of the morning session.
“Gold is under severe selling pressure. The metal has entered into a bear phase, due to investors’ bullish sentiment towards the equity market. Funds are taking money out of commodities to invest in alternative instruments linked with equity markets. The next resistance level gold can see is at $1,240 an oz and then $1,200 an oz,” said Gnanasekar Thiagarajan, Director, Commtrendz Research.
This means gold has a further decline potential of at least five per cent from the current level. Noticing the downward sentiment, HSBC on Tuesday forecast gold to move in a range of $1,150 to $1,350 an oz during the rest of 2014, in a market “searching for a new equilibrium”, with a number of offsetting factors. It maintained its 2014 average price forecast at $1,292 an oz and listed 2015 and 2016 forecasts of $1,310 and $1,345 an oz, respectively.
“Gold and silver are likely to trade lower, as growth in the US economy will lead to a decline in investor interest,” said Prathamesh Mallya, senior research analyst (non-agri commodities), Angel Broking.
Spot silver prices are trading higher, taking cues from a positive movement in gold prices and trading at $19.09 an oz. Weakness in the dollar index and technical buying is supporting prices. However, weakness in the base metals pack is capping the rally. On the MCX, silver prices are trading higher by 0.2 per cent and trading at Rs 41,578 a kg.
At Rs 27,600 per 10g, gold remained range-bound at the spot market here in Zaveri Bazaar.
Further, the European Central Bank cut interest rates to a record low on Thursday and launched a new scheme to push money into the flagging euro zone.
“When the United States announced QE, analysts feared an inflationary concern. But, that did not happen. Now, there is no such fear even today after the ECB announced QE. More than the dollar’s strength, it is the euro which is weakening. Hence, the dollar’s strengthening is natural,” said Thiagarajan.
At Rs 27,600 per 10g, gold remained range-bound at the spot market here in Zaveri Bazaar.