Business Standard

Gold drops on Goldman Sach's bearish outlook

Gold prices on Tuesday fell sharply in the foreign market - from $1,330 to $1,290 an ounce - after Goldman Sach's bearish outlook

Gold jewellery
Image via Shutterstock
Related News

On April 15 last year, prices had corrected sharply, following investment bank saying it had a bearish outlook on the commodity. At that time, prices had fallen from $1,600/oz to $1,300/oz in only a few days.

On Tuesday, exactly a year later, again fell sharply in the foreign market—from $1,330/oz to $1,290/oz—in just a few hours. Again, it was Goldman Sachs that came up with a bearish outlook—it said the metal would hit $1,050/oz by the year-end.

Tuesday’s fall, however, wasn’t reflected in the Indian market, as spot prices in Mumbai closed Rs 200/10g higher at Rs 29,680/10g. A trader said this was because spot premium, earlier quoted at $35, had crossed $50 and was quoted at $55/oz. Therefore, the fall wasn’t reflected in domestic spot prices. In India, demand is quite high due to lower prices and ahead of Akshaya Tritiya.

In the international market, positions were cut, amid reports showing conditions in the US economy were improving. Tuesday’s data on retail sales in the US also showed strength in demand. The recent gold rally was likely driven by US macroeconomic data and events in Ukraine.

“US retail data came out very strongly, which means tapering will continue. Due to the strengthening US economy, holding gold is not beneficial. Also, the World Gold Council showed China’s gold demand to witness a negligible rise in the next few years,” Gnanasekhar Thiagarajan, director of Commtrendz Research said, explaining the fall in prices.

“At every high level, hedging by producers comes into the picture in a very big way. This time, at $1,330/oz, producer hedging saw massive activity,” he added.

In its report, Goldman Sachs also said silver prices were likely to stand at $17.5/oz by the year-end.

From $1,290/oz, gold had marginally rebounded to $1,294/oz on Tuesday, while silver was trading at $19.45/oz, down three per cent compared to morning trade.

Goldman Sachs said unlike last year, this time, the price fall might be gradual. “While further escalation intentions could support gold prices, we expect a sequential acceleration in US and Chinese activity. Therefore, gold prices could decline, though it might take several weeks to lift uncertainty around this acceleration. Importantly, it will require a significant sustained slowdown in US growth for us to revisit our expectation for lower US gold prices through the next two years. Beyond the acceleration in US activity, signs of sequentially weaker Chinese gold imports could out pressure on prices in coming months.”

Read more on:   
|
|
|

Read More

China shadow on India's jewellery manufacturing

A number of cos await revival in global demand to shift basefrom India

Quick Links

 

Market News

Markets near two-week lows; Nifty slips below 8,000

Markets were trading near two-week lows on caution ahead of the US Fed meet later today

P-Notes investment rises to Rs 2.11 lakh crore in August

Investment through this route has been rising in the past few months

KPMG will do forensic audit of UCX: FMC

This, after it was found that the promoter allegedly siphoned off funds from the exchange

Mid- and small-cap stocks tank on profit booking

Century Plywood, Munjal Showa, CCL Products, Himadri Chemicals and Marksans Pharma from small-cap index plunged more than 10% each.

Sensex slumps over 200 points; Nifty below 8,000

Sensex was lower by 263 points at 26,554 mark and the Nifty slipped by 90 points at 7,952

Back to Top