Daijiworld Media Network - Mumbai
Mumbai, Nov 2: Gold and silver prices recovered on Monday after suffering sharp losses last week, supported by easing inflation concerns following a decline in crude oil prices. However, market experts cautioned that the recovery would depend on global interest-rate expectations and upcoming US economic data.
On the Multi Commodity Exchange (MCX), December gold futures opened Rs 518 higher at Rs 1,39,003 per 10 grams, against the previous close of Rs 1,38,485. At the time of reporting, the contract was trading at Rs 1,38,733, up Rs 248.
December silver futures also opened higher at Rs 1,81,094 per kg, gaining Rs 1,962 from the previous close of Rs 1,79,132. The contract was trading at Rs 1,81,125, up Rs 1,993.
Earlier this year, gold futures had touched a high of Rs 1,80,779 per 10 grams, while silver had reached Rs 4,20,048 per kg.
In the international market, gold futures on Comex opened at $3,890 per ounce, compared with the previous close of $3,898.90. At the time of reporting, gold was trading $116.20 higher at $4,015.10 per ounce. Its high earlier this year stood at $5,586.20 per ounce.
Comex silver futures opened at $49.20 per ounce against the previous close of $49.27. The metal was trading at $50.05, up 78 cents. Silver had touched a high of $121.79 per ounce earlier this year.
Technical outlook
According to Ajay Kedia, director of Kedia Advisory, gold was witnessing fresh selling pressure from a technical perspective. Open interest increased 4.9 per cent to 16,368 contracts, while prices declined by Rs 4,111, indicating the creation of fresh short positions.
Gold has support at Rs 1,36,960. A break below this level could drag prices towards Rs 1,35,440. On the upside, resistance is placed at Rs 1,41,290. A sustained move above this level could push prices towards Rs 1,44,090.
Silver was also showing signs of fresh selling pressure. Its open interest rose 1.36 per cent to 18,105 contracts, while prices declined by Rs 10,321, indicating fresh short positions.
Silver has support at Rs 1,75,880, with a break below this level potentially taking prices towards Rs 1,72,620. Resistance is seen at Rs 1,85,330, while a sustained move above it could open the way towards Rs 1,91,530.
Factors behind the recovery
Vikram Subburaj, chief executive officer of Giottus.com, said gold and silver were recovering in Asian trade on November 2 as falling crude oil prices eased inflation concerns and offered support to precious metals.
Gold had declined 3.7 per cent on Friday, while silver fell nearly 6 per cent. Subburaj said investors had also sold precious metals to offset losses in technology stocks, explaining the sharp fall in bullion despite its traditional safe-haven appeal during periods of uncertainty.
He added that the sustainability of the recovery would partly depend on whether expectations of tighter monetary policy ease.
US interest-rate futures were indicating a 72 per cent probability of a 25-basis-point rate increase by the Federal Reserve in December. Higher bond yields could increase the opportunity cost of holding non-interest-bearing assets such as gold and silver.
The US employment report scheduled for November 6 is expected to be the next major trigger for precious-metal markets, Subburaj said.