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Gold, silver prices to face pressure amid global economic recovery hopes

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Kolkata: Bullion prices are likely to continue the weak trend in the rest of the week as positive US manufacturing data increased optimism in the market regarding global economic recovery and curbed demand for the safe-haven metal.

In the domestic market, October gold opened on Multi Commodity Exchange (MCX) at Rs 51,449 per 10 gm, lower than Tuesday’s closing of Rs 51,502. MCX December silver opened on a negative note at Rs 70,600 per kg, lower than yesterday’s closing of Rs 70,890 per kg.

Anuj Gupta, deputy vice-president (commodities and currencies research), Angel Broking said “Yesterday gold prices fell by 0.38% and closed at 51,502 levels, and silver prices have increased by 0.64% and closed at 70,890 levels. In the international market gold is trading at $1963 per troy ounce and silver is trading at $28.06 levels. The US dollar hovered near more than a two-year low which made gold cheaper for other currency holders. Weaker US dollar, lower interest rate, expectation of a vast stimulus infusion and growing rift between US and China ahead of the US elections continued to attract investors towards gold on Tuesday.”

But on Wednesday, the US dollar recovered as US factory activities strengthened in August which might weigh on gold prices,” added Gupta.

Navneet Damani, vice-president (commodities research) at Motilal Oswal Financial Services added that along with the US, manufacturing PMI (purchasing managers’ index) data of other major economies were also reported better than expectations hence keeping pressure on the metal.

“On other hand, Senate Republicans are likely to take up their Covid-19 relief bill next week offering $500 billion in additional federal aid, White House chief of staff Mark Meadows said, hence giving support to the bullion on lower levels. Market participants will keep an eye on the private payroll numbers which, if reported better than expectations, could put pressure on gold prices and create optimism for the non-farm payroll data scheduled later in this week. Broader trend on COMEX could be in the range of $1920- 2010 per troy ounce and on domestic front prices could hover in the range of Rs 51,060-52,030 per 10 gm,” said Damani.

“Upbeat data from China and Japan on Tuesday also restored hopes for economic recovery from the major global economies. However, we still believe that this could be a buying opportunity in the markets as the Federal Reserve will keep rates low for a long time, which is bearish for the US dollar. Technically, both gold and silver are trading on negative note from last session where prices can see some sideways to marginal downside momentum in coming sessions,” said Sriram Iyer, senior research analyst at Reliance Securities.

US and China reported better than expected PMI manufacturing data which influenced markets.

“We expect gold and silver prices to trade sideways to down for the day with MCX gold October support lies at Rs 50,800 per 10 gm, while MCX silver December has important support at Rs 67,000 per kg. Resistance for MCX gold October and MCX silver December lies at Rs 51,700 per 10 gm and Rs 72,000 per kg respectively,” said Tapan Patel, senior analyst (commodities) at HDFC Securities.

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