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>Silver improves; gold down on profit taking
Mumbai - Gold traded down in global market weighed by U.S. dollar strength and higher equity markets but traders and analysts said the metal could trend higher if the dollar weakens. Following the suite gold-silver futures traded lower on Multi Commodity Exchange Friday on selling pressure from higher level strong dollar. As of now precious metals are taking cues from the global market and traded lower on the domestic front.
The gold June futures traded down by Rs 30/10gm while silver May futures up up by Rs 23/kg.
MCX most active gold June contract opened down by Rs 22 at Rs 14,809/10gm. The contract saw movement between Rs 14,788 and Rs 14,817/10gm. At 10.56 am IST, the contract traded down Rs 30 at Rs 14,803/10gm. Total volumes in June contract recorded 1801 lots.
MCX gold mini the most active June contract opened up by Rs 15 at Rs.14, 785/10gm. The contract saw movement between Rs. 14,780 and Rs. 14,849/10 gm. At 10.58 am IST, June contract traded down by Rs 29 at Rs. 14,805/10 gm. Total volumes in June contract recorded 2638 lots.
Benchmark silver July contract opened down by Rs 65 at Rs 22,762/kg. The contract fluctuated between Rs 22,762 and Rs 22,889/kg. At 10.59 am, IST, silver July contract traded up by Rs 23 at Rs 22,850/kg. Total volumes in July contract recorded 1605 lots.
MCX silver mini June futures opened down by Rs 23 at Rs. 22,780/kg. It fluctuated between Rs.22,780 and 22,872/kg. At 11.00 am mini silver June futures traded up by Rs 28 at Rs 22,852/kg. Total volumes in June contract recorded 1986 lots.
Prices closing above the $920 a troy ounce technical level overnight has boosted positive momentum, helping gold to stand firm despite stronger equity markets in Asia and the dollar trending sideways against the euro.
"Right now there isn't much interest on either side but it's holding pretty well above $920/oz, helped by the PPI data," said Anderson Cheung, director of precious metals at Mitsui Bussan in Hong Kong.
U.S. producer price index data for April overnight showed a rise of 0.3% on month, well above market expectations.
"It means the inflation concerns could be valid, even though the economy is so weak at the moment," said Anderson.
The primary catalyst behind gold's recent strength has been U.S. dollar weakness, with fears for future inflation and renewed risk appetite lessening the case for holding cash.
Later Friday markets will see consumer price index data, another inflation gauge, which will be keenly watched following the PPI for further clues on changes in deflationary or inflationary pressures.
Other traders said it was too early for inflation pressures to be felt, but it's best not to stand in the way of market sentiment.
"The best trade right now is to do nothing. It's too early for inflation risk," said a Tokyo-based trader.
"Banks are still not giving out credit, U.S. banks are told to raise capital, and have to shrink their balance sheets - in that environment, how can inflation happen? But you can't stand in the way of a rising market, so we need to keep asking ourselves how true the price rise is," the trader said.
Another concern is the lack of physical buying as prices moved above the $900/oz level, traders said, meaning that technical and speculative momentum needs to keep building to propel prices higher.
At 0711 GMT, spot gold traded at $925.70/oz, unchanged from the New York close, and silver traded at $14.01/oz, down 4 cents. Platinum was up $6 at $1,117.00/oz and palladium down 50 cents at $223.50/oz.
Gold futures on Tocom were down Y7 at Y2,864 a gram for the April 2010 benchmark contract, while platinum futures were up Y58 at Y3,474/gram.
Gold quiet but PPI data keeps it well bid
Singapore - Spot gold at $926/oz, up 30 cents since NY close, but market very quiet, looks unlikely to move much before the weekend, says Anderson Cheung, director of precious metals at Mitsui Bussan in Hong Kong. "Right now there isn't much interest on either side but it's holding pretty well above $920, helped by the PPI data," he says. U.S. PPI for April up 0.3% on-month, well above market expectations. "It means the inflation concerns could be valid, even though the economy is so weak at the moment." Says primary underlying catalyst behind recent gold strength is USD weakness; fears for USD mean bias is to the long side.
Source : COMMODITIESCONTROL
