The week began on a lacklustre note, but the spurt on Friday helped gold close at $1,397 an ounce, up 1.5 per cent for the week. Silver ended 3.7 per cent higher at $24.06/ounce. Friday’s rally was triggered by weaker than expected US home sales data. Sales of new homes in the US dropped 13.4 per cent to 3.94 lakh in July, the lowest in nine months. This revived hopes of the Fed continuing its bond buying programme.
Physical demand for gold inched up and the SPDR Gold Trust — the world’s largest gold backed ETF saw its first fortnightly inflows for the year. At 920.13 tonnes, the trust’s holding was up 4.8 tonnes last week.
Not upbeat at start
However, data releases in the initial part of the week were not that upbeat. The flash US Purchasing Managers Index rose to 53.9 in August, from 53.7 in July.
For the week ending August 17, the number of people filing for jobless claims stood at 3.36 lakh and the four-week moving average of unemployment claims moved to a six-year low.
In the domestic market, gold and silver made an upward stride with the rupee weakening to a record low of 65.4 against the US dollar.
MCX Gold gained 1 per cent and ended the week at ` 31,905/10 gram. MCX Silver was up 5 per cent to ` 53,469/kilogram.
With the Reserve Bank of India last week clarifying the operational aspects of the 80/20 rule, gold imports of the country will kick-off and see premium of the spot gold prices going down.
Spot gold prices in India have been at a premium for many weeks as imports of gold into the country have come to a halt after RBI’s July circular that put conditions on gold imports.
Cues for next week
The minutes of the FOMC’s (Federal Open Market Committee) July meeting that was released mid-last week had it that the stimulus rollback would start only with a clear signal of economic revival. Traders may now closely watch the US economic releases next week. The consumer confidence number on Tuesday and the labour market data and the second estimates of June quarter GDP on August 29, will also offer some cues. The advance estimate that came end-July had put the GDP growth at 1.7 per cent for the June quarter versus the 1.1 per cent growth for the March quarter. In the second estimates that will be released coming Thursday, analysts expect some positive news.
Levels for traders
Gold has to cut a key resistance at $1400/ounce. Chances are that it will make gains in the coming week. MCX gold is close to its record high. In the coming days, the metal may record new highs if rupee too weakens from the 64/dollar levels. The first pause for the metal will be at ` 32,400. If this level is cut, more gains can be seen. On the downside, the metal will find support at` 30,240 and then at ` 29,220.
MCX silver moved in line with our expectation. The metal has rallied quite sharply in the last two weeks. We see the momentum continuing in the metal in the coming week with the first resistance at ` 55,000/kg and the second at ` 56,800/kg. On the downside, the support would be at ` 50,400/kg and ` 50,600/kg.
Source: Hindu business line.