Gold remained stable near its one month high- above $1690 an ounce till Wednesday morning. Gold eased on Wednesday, retreating from the previous session's one-month high, as signs of an improving global economy capped investor interest in safe-haven investments.
Silver jumped above $32.30 an ounce, again at a one month high, as stocks and commodities were broadly flat.
However, by noon, the precious metals market moved down. The metal fell for the first time in the last three sessions, after the European Commission said consumer morale in the euro zone improved sharply in January.
Spot gold fell 0.3 percent to $1,685.54 an ounce by . It did hit a one-month high of $1,695.76 in the previous session but failed to retain upward momentum on lower investment demand and technical resistance.
The current support level on gold is at $ 1661 and $ 1653 respectively. Gold has not reacted positively on bullish bullion news and does not seem to correlate well with currencies or oil
Gold prices in the spot market were less volatile on Wednesday due to the rise in the risk aversion in the international markets ahead of the US debt ceiling voting. Though gold and silver were moving on a positive note on Wednesday morning, worries over the decision on the US debt ceiling propelled the prices to fall by noon.
As far as China is concerned, demand continues to rise ahead of the Lunar Year Celebration on February 10. In fact traders have already stocked up for the holiday demand.
In India, appreciation in the rupee forced downside pressure on the gold prices.
Moreover in India, the market for physical gold remains quiet due to the increase in duty on gold. The Indian government lifted the import duty on refined gold to 6 percent from 4 percent and more than doubled the import duty on gold bars and ores.
The government's move to hike the customs duty will have a loud impact on the Bullion sector. The hike sums up to around INR 60,000 (approx) per kilogram of gold. To be clear, with this duty hike a difference of 7 percent between the international and domestic price of the yellow metal is evident.
This may lead to rise illegal channels and malicious activities with respect to importing gold and related products like jewellery etc., in the country and also adversely affect the jobs of skilled artisans and local jewelers.
The government should harness the existing reserve of gold in our country rather than turning towards imports and implementing this alarming hike on customs duty. Also other opportunities for revenue generation, like increasing exports should be explored by the government of India.
Friday being Eid and Saturday being Republic Day, domestic markets were more or less stable.
Demand in the physical gold market remained strong in most of Asia, but buying by major bullion consumer India was expected to pause in the next few days while the government provides details on tax changes this week.
Meanwhile, the further talks regarding the US debt ceiling and the spending cut may influence precious metals prices in the weeks to come.
The current support level on gold is at $1661 and $1653 respectively. Gold has not reacted positively on bullish bullion news and does not seem to correlate well with currencies or oil
Gold investors were looking ahead this week to a heavy schedule of economic indicators, including gross domestic product, the Institute for Supply Management Manufacturing Index and the January employment situation report, among others.
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