Bullion futures drops on weak overseas trend

Weakness and selling overseas on Tuesday pushed local bullion futures down in Multi Commodity Exchange of India's second trading session. However, prices might rise because new data from US would induce gold demand, dealers said.

Overseas spot prices traded in $544-$545 an ounce range on Tuesday.

"Trade here was quiet as most traders were away for Holi," said Narendra Rathod, a Jaipur-based trader.

Prices of spot quoted by Mumbai traders gold at 1730 IST, were Rs 7,940 per 10 gram .999 gold variety and Rs 7,895 per 10 gram of .995 gold, Rs 5 less compared with Monday prices.

Later on Tuesday, "two crucial U.S data is going to be released which will further determine the direction for gold prices," said an analyst with IL&FS Investsmart.

"Expectations are that the data will be gold-friendly and, hence, prices could move up."

Market is expecting the US retail sales for February to fall 0.8 per cent compared with 2.3 per cent rise in the previous month.

US fourth quarter current account deficit is expected to widen to $219.5 billion from $195.8 billion in the previous month.

If these expectations""especially the one on current account""are met, then dollar would soften, leading to gains in gold prices. After that "April gold will move in the Rs 7,910-8,000 per 10 gm range on Tuesday," said the analyst.

At 1728 IST, April gold was Rs 7,935 per 10 gm, down 0.33 per cent from Monday.

In the morning session, May silver fell tracking gold prices.

However, at 1730 IST, spot silver closed up Rs 75 at Rs 14,290 per 1 kg, taking support from copper. Silver normally follows trends in gold and its parent metal "" copper.

"Silver prices too are dependent on the data and prices will follow the trend in gold prices in evening trade," the analyst said.

May silver will trade in Rs 14,250-14,400 per 1 kg range, he said. At 1731 IST, May silver was Rs 14,279 per 1 kg, down 0.23 per cent.

A report from IL&FS Investsmart said resistance for MCX April gold is likely to be at Rs 8,015 per 10 gm and will get support at Rs 7,926 per 10 gm. MCX May silver is likely to find resistance at Rs 14,388 per kg and support at Rs 14,185.