Physical demand for gold all across Asia increased sharply
Bullion metal prices ended higher on Tuesday, 16 April 2013. Prices of gold and silver prices recovered from their two year low figures. Buyers stepped in the bullion market thinking that the recent selling was overdone.
Gold for June delivery ended higher by $26.3 (1.9%) at $1,387.4 an ounce on the Comex division of the New York Mercantile Exchange on Tuesday. Prices had dropped almost $200 a day earlier.
May silver ended higher by $0.27 cents (1.1%) at $23.63 an ounce on Tuesday. Prices had lost 3.3% last week.
Emotions were less frayed on Tuesday as gold rebounded well off its overnight two-plus-year low. However, there remains a bit keener anxiety in the market place, with much for traders and investor to ponder as the week plays out.
Reports overnight said physical demand for gold all across Asia increased sharply following the recent plunge in gold prices. Major gold consumers China and India saw their citizens snapping up gold jewelry and bars as prices reached two-year lows. Some retail stores in Asia ran out of gold products for sale. The big jump in demand for physical gold helped stop the bleeding in the gold market.
In the currency market, the dollar index, which weighs the strength of the dollar against a basket of six other currencies, fell by 0.6% on Tuesday.
At Wall Street, domestic economic news showed that March housing starts outpaced expectations. Even though annualized housing starts surpassed the one million mark, all of March gains resulted from multi-family construction. Those starts increased by nearly 100,000 from 318,000 in February to an unsustainable 417,000. As a result, multifamily construction is likely to retreat next month.
Meanwhile, single-family starts fell from 650,000 in February to 619,000 in March. That was the first decline since November. The decline is likely not the start of a new steady downward path, as the February starts number was well above trend following a substantial upward revision (from 618,000). Excluding the February gain, single-family starts have remained flat since December.
Looking at the remainder of today's economic data, consumer prices fell 0.2% in March after increasing 0.7% in February. Market had expected prices to decrease 0.1%. Excluding food and energy, core prices increased 0.1% after rising 0.2% in February. The market had expected core prices to increase by 0.2% for a second consecutive month.
At the MCX, gold prices for June delivery closed higher by Rs 132 (0.5%) at Rs 25,766 per ten grams. Prices rose to a high of Rs 26,131 per 10 grams and fell to a low of Rs 25,270 per 10 grams during the day's trading.
At the MCX, silver prices for May delivery closed lower by Rs 183 (0.4%) at Rs 44,195/Kg. Prices opened at Rs 43,876/kg and fell to a low of Rs 42,753/Kg during the day's trading.
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