Gold, silver hit multiuple-month lows on selling pressure
Mumbai-India (Mar 7) Gold had hit a three-month low in spot trade in Zaveri Bazaar here on Saturday following selling pressure that also pulled down bullions in global markets to two-month low the previous day.
Standard gold (.995 purity) closed on Saturday with a decline of 1.6 per cent or Rs 440 to Rs 26,410 per 10 gms, the level not seen after December 1, 2014. In London, gold posted a daily loss of 2.65 per cent or $31 to settle at $1,169.2 an oz on Friday.
"The decline is sharper in India than overseas due to depreciation in the Indian currency. In global markets, however, the fall in gold price was attributable to appreciation in dollar index due to better than expected US job data," said Ajay Kedia, managing director of Kedia Commodity, a city based broking firm.
According to reports, US total non-farm payroll employment increased by 295,000 in February and the unemployment rate edged down to 5.5 per cent from 5.7 per cent, which was significantly better than the forecast for the addition of 240,000 jobs and a 5.6-per cent unemployment rate.
Positive US payroll data helped the US dollar index improve against major global currencies. US dollar is currently trading at a fresh 11-year high against the euro at 1.0985 which continued to weigh on metals.
Gold sustained the psychological level of $1,200 an oz for almost three months after a speech by the European Central Bank (ECB) president Mario Draghi on the central bank's bond-purchasing programme. Draghi set a floor for bond purchases at the ECB's deposit rate of (-)0.2 per cent, following questions regarding to the extent to which the central bank will dabble with negative-yielding bonds.
Meanwhile, ECB also revised its 2015 gross domestic product (GDP) growth projection higher to 1.5 per cent from its December '14 forecast at 1.0 per cent. It revised GDP growth forecast for 1.9 per cent now from 1.5 per cent earlier and 2.1 per cent for 2017.
All these indicate that global economies will remain robust especially in emerging countries including India.
"We, therefore, expect gold to see next support level of $1,140 an oz and then $1,118 an oz translating thereby in rupee term at Rs 25,250 per 10 gms, the level gold hit last and bounced back," said Kedia.
Silver also hit two months low to close on Saturday at Rs 36,700 a kg here. With a decline of 1.87 per cent or Rs 700 on Saturday, silver had seen this price level last on January 3.
In London, however, silver breached the psychological barrier of $16 to close on Friday at $15.96 an oz.
"In India, traders were expecting a cut in import duty in the Union Budget on February 28 to bolster gold demand in India. But, somehow, the Finance Minister Arun Jaitley choose not to cut import duty resulting into a disappointment for bullion dealers and traders. Hence, selling pressure is likely to continue," said an analyst.