As reported yesterday, gold looked to be heading back to its down trend below the all-important 1300 price level. The shiny commodity did as expected and did it in style dropping to 1291.75 in the Asian session down 0.80%. The dollar index is trading marginally down by 0.10%, limiting the fall in gold prices. The metal rose early in Asian trading on a weaker dollar but failed to find support amid lackluster demand in China, the second biggest gold buyer. Losses were exacerbated by technical selling once the price fell below $1,300.
The Dallas Federal Reserve president Fisher said that the Fed will consider tapering the quantitative easing very soon as the US economy is improving. This may have pressurized gold prices in the morning. From the economic data point of view, German factory orders might improve and support gains in the euro, limiting the fall in gold prices. However, in the US session, the dollar is expected to remain positive on the back of a positive trade balance, which would pressurize gold prices later today.
Gold and silver futures closed slightly lower, as investors continued to react to last week’s economic data and expectations for an eventual slowing of the Federal Reserve’s monthly asset purchases.
Gold holdings of SPDR gold trust, the largest ETF backed by the precious metal, declined to 917.14 tons, as on August 6. Silver holdings of ishares silver trust, the largest ETF backed by the metal, declined to 10,396.73 tons, as on August 2. Weak physical buying in China and India was also seen pressuring the commodity prices to certain extent in the global market to certain extent.
The base metals complex traded on a negative note in the yesterday’s trading session as a result of weak global market sentiments in later part of the trade. Further, favorable economic data from US led to expectations of pullback in stimulus measures which acted as a negative factor. However, sharp downside in prices was cushioned on the back of decline in LME inventories coupled with rise in non-manufacturing data from US. Copper is trading at 3.164 this morning down by 3 pips but remaining in a tight range. While silver prices at the international market are trading at $19.618, down by 0.52% since the morning.
Silver prices are taking cues from the statement by Dallas Fed chairman, in which he stated that THE Central Bank may soon taper the monetary stimulus program. The strengthening of the dollar index against the majors may keep silver prices weak. From the eurozone, German factory orders might increase and may limit the fall in silver prices on the back of the appreciation in the euro. However, gains in silver prices would be limited during the US session on the back of the appreciation in the dollar.