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The price of standard gold fell 1.1 per cent in India’s spot market in early trade on Tuesday, after the metal slipped below a key support level of $1,200 an oz in the international market, on fear of an interest rate increase by the US.
Gold, however, bounced back after the US market opened. While the yellow metal rose $22 an oz over its previous close to $1,220.7, the price of silver increased $0.36 to $16.62 an oz.
Earlier in the day, the two metals had lost some value in both the physical and futures markets in India. “A sharp rebound was seen in bullion on Tuesday after a statement from the European Central Bank stressing the need for a stimulus. Also, positive economic data from Germany aided a sharp recovery in the euro against the dollar,” said Gnanasekar Thiagarajan, director, Commtrendz Research.
Interestingly, even as global crude oil prices fell below $60 a barrel, the entire commodity basket traded lower on Tuesday, with copper, aluminium and zinc all posting declines from their previous closing levels. In early
London trade, copper was quoted two per cent lower in the spot market, at $6,382 a tonne. Other base metals followed suit. Brent crude oil was trading at $59.09 a barrel at 8 pm (IST).
Amid speculation that the US Federal Reserve would announce a concrete plan on interest rate revision at its scheduled Federal Open Market Committee (FOMC) meeting on Tuesday, a widespread selling was seen across commodities.
“While the euro zone stimulus was positive for gold, statement from FOMC will set a direction for bullion. Any positive statement will support gold’s upward move. We expect gold and silver to rise to $1,255 and $17.80-18 an oz, respectively, in the near term,” said Thiagarajan.
At Zaveri Bazaar here, spot gold closed at Rs 27,800 per 10g, Rs 670 higher than the previous close. Spot silver closed at Rs 38,900 per kg, a gain of Rs 450.
On the Multi Commodity Exchange (MCX), gold traded at Rs 27,161 per 10g, a decline of 0.58 per cent, after shedding some losses in early trade. Silver was trading at Rs 37,533 a kg on the exchange, 2.04 per cent lower than the previous close.
On the London Metal Exchange, the price of copper fell 0.1 per cent, as the latest manufacturing data from China showed a continued slowdown in that country’s industrial activity. On MCX, after falling 0.6 per cent to Rs 407.60 a kg in early trade, the metal had recovered to Rs 411 a kg by early evening.
“Ample supplies and bleak demand dominate the scene in oil markets. Low growth in China and euro zone will also act as a negative for prices. So, copper might trade lower, given the weak industrial activity in China, the biggest consumer of base metals, and expectations of relatively weak economic data from the US. Also, investors will remain cautious as the Federal Reserve begins its two-day meeting on Tuesday night,” said Prathamesh Mallya, senior research analyst, Angel Commodity Broking.
