Gold is likely to remain subdued this week on profit booking by global investors. Lack of safe haven buying support may continue, pulling the yellow metal further down and giving an opportunity to new investors to balance their portfolio had they missed the chance in the past.
“The precious metal may breach the level of Rs 21,200 per 10 gm this week due to the continuation of profit booking by investors even at the current level,” said Gnanasekar Thiagarajan, director at Mumbai-based commodity broking firm Commtrendz Research.
Standard gold declined nearly two per cent last week in Mumbai’s Zaveri Bazar in line with the global trend. After opening at Rs 22,020 per 10 gm on Monday, it slipped gradually to close the week at Rs 21,585. Similarly, pure gold plunged to end the week at Rs 21,690 per 10 gm. In London, it recovered marginally from the initial loss by the mid-week, but lack of fundamental support pulled it down to settle rangebound at $1487.78 an oz on Friday.
A marginal recovery in global economy supported all other asset classes, including interest rates, to lure investors. Consequently, commodities like base metals turned bullish, but precious metals moved downward.
This is just a sentimental change which has grappled precious metals. Investors who had hedged their position earlier when economic scenario was not favourable, were getting reversed now, said Thiagarajan.
Traders, meanwhile, abstained from physical activity in the domestic market due to volatility in global markets. A marginal activity was witnessed only on Saturday when customers booked afresh, said Ketan Shroff, director of Pushpak Bullions, a Mumbai-based bullion trader.
Gold for delivery in August opened the week on the Multi Commodity Exchange (MCX) at Rs 22,211 per 10 gm. It made a high of Rs 22,225 initially, but then fell sharply, breaking both supports. It finally found support at Rs 21,612 per 10 gm levels. Later, prices recovered towards Rs 21,710 per 10 gm and finally closed the week at Rs 21,695, with a weekly loss of Rs 504, compared to the previous week’s close of Rs 22,199.
“There has been no change in fundamentals. At the current price, customers can get only a temporary respite from high prices. With the Greek austerity plan, the global economic uncertainty has temporarily ended. But nobody knows small European countries like Ireland and Portugal would not require bailout package to save their economies from bankruptcy. Unless such a situation emerges, gold and silver will continue to lose the status of safe haven demand. Also, crude oil has declined, thereby easing any alarming concern of inflationary pressure,” said Naveen Mathur, associate director (commodities and currencies), Angel Broking.
Similarly, silver fell 1.30 per cent last week to close at Rs 51,585 per kg in the physical market. The white precious metal for delivery in September opened the week at Rs 52,490 per kg. It moved lower initially, but found support at Rs 51,287 per kg levels. Later, prices moved sharply higher towards Rs 53,313 per kg level, but could not sustain and fell back sharply to close the week at Rs 51,358 per kg, with an overall decline of Rs 1,435, compared to the previous week’s close of Rs 52,793. In the London physical market, silver found some support to close the week at $33.87 an oz compared with $33.57 in the beginning. Thiagarajan believes silver may find support at Rs 48,700 per kg this week.
