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Gold and silver fell sharply on Wednesday, following a decline in both the metals in international markets yesterday. However, traders say some demand was seen in the Indian market, and this led to a rebound in both metals.
In the Mumbai spot market, gold hit a low of Rs 29,050 per 10 gm, while silver hit a low of Rs 51,300 per kg. Gold closed at Rs 29,195 per 10 gm, against yesterday's close of Rs 29,535 per 10 gm, while silver closed at Rs 52,110 per kg on Wednesday, compared with yesterday's close of Rs 53,400 a kg. Yesterday, the dollar index crossed 83-levels and the increasing appetite for equities resulted in profit booking in gold exchange-traded funds and the derivatives market. Instability in Italy and Cyprus has weakened the euro against the dollar.
“I expect gold to move lower and probably touch Rs 28,500 per 10 gm in the end of April. I also expect silver to fall to Rs 48,000 a kg by the end of the month,” said Suresh Hundiya, a Mumbai-based bullion trader.
On Wednesday, prices of both the metals recorded 10-month lows. Silver dropped sharply to about Rs 51,000 a kg on MCX futures, while gold fell to about Rs 29,000 per 10 gm in the futures market. At lower levels, some buying was seen for futures and the dollar-index rebounded from 83.06 to 82.86. Commodity brokerages have downgraded the outlook for the two metals. Emkay Commodity expects gold prices to fall further, as strong equity markets and an improving outlook for the US economy would continue to put pressure on prices.
India Infoline Commodities said, “Among the pack, silver seems to be more vulnerable, as there is substantial deterioration on the charts. Silver prices are well poised to move lower towards $26 an ounce. For gold prices, $1,550 an ounce seems to be a crucial support level---a breach of this could drift the prices towards $1,520 an ounce.”
Dharmesh Bhatia, assistant vice-president of Kotak Commodity Services, expects silver to test the previous low of $26.36 an ounce Ajay Kedia, managing director of Kedia Commodities, said, “We expect silver to fall to Rs 48,000-49,090 a kg, while gold may fall below Rs 28,000 per 10 gm.”
