Bullion to trade negative on weak global market sentiments

Gold: Spot gold prices declined by 0.6 percent yesterday on the back of rise in risk aversion in the global markets as investors awaited stimulus measures to be decided on August 31st 2012 at the Jackson Hole Wyoming. Additionally, strength in the US Dollar Index (DX) also exerted downside pressure on gold prices. The yellow metal touched an intra-day low of $1652.36/oz and closed at $1655.94/oz in yesterday’s trading session. On the MCX, Gold October contract declined by 0.3 percent and closed at Rs.30,847/10gms after touching an intra-day low of Rs.30,734/10gms on Wednesday.

Silver: Taking cues from fall in gold prices along with downside in the base metals complex, Spot silver prices declined by 0.5 percent yesterday. Additionally, a stronger DX also added downside pressure on silver prices. The white metal touched an intra-day low of $30.55/oz and closed at $30.70/oz on Wednesday. In the Indian markets, prices declined by 0.1 percent and closed at Rs.57,559/kg after touching an intra-day low of Rs.57,160/kg in yesterday’s trading session.

Outlook: In today’s session we expect precious metals to trade with bearish note on the back of weak global market sentiments along with doubt amongst investors whether US Federal Reserve will decide for further stimulus measures in the annual meeting on August 31, 2012. Additionally strength in the DX is likely to exert downside pressure on the precious metals. However, in the domestic markets depreciation in the Indian rupee might cushion sharp fall in the prices.

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