On Wednesday, spot gold prices rose by 0.4 percent to close at $1163.4 per ounce ose to the highest in nearly four weeks on Wednesday as the dollar edged back from a 14-year peak and physical demand from major consumers China and India increased.
Holdings of the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, dropped 1 percent to 813.87 tonnes on Tuesday. Holdings are down about 14 percent since the U.S. presidential election in November.
The dollar index retreated from its highest level since late 2002, a level reached after U.S. manufacturing data beat expectations on Tuesday. On the MCX, gold prices declined by 0.35 percent to close at Rs.27682 per 10 gms.
Spot silver prices rose by 0.9 percent on Wednesday to close at 0.9 per ounce. The rise in silver prices is in line with rise in gold prices and bargain hunting at lower levels. On the MCX, silver prices traded flat at Rs.40267 per kg.
We expect gold prices to trade higher on bargain hunting at lower levels while weak dollar will also act as a positive factor. Low investment demand is something that needs a closer watch however, which will cap gold prices. On the MCX, gold prices are expected to trade higher today, international markets are trading higher by 0.84 percent at $1173 per ounce.
WTI oil prices rose by 1.8 percent on Wednesday to close at $53.3 per barrel on expectations U.S. crude inventories have dropped and on signs that the world’s top oil exporters will stick to agreed output cuts that took effect this week.
In post-settlement trade, crude rose slightly after industry group the American Petroleum Institute reported that crude stockpiles fell 7.4 million barrels in the week ended Dec. 30.
Oil companies likely drew down inventories in the final week of the year for tax-related reasons, which could lead prices to spike after the government’s inventory data is released on Thursday.
OPEC member Kuwait also lifted expectations that producers will comply with a deal to reduce oversupply after its state-owned oil producer said on Wednesday it would cut output in the first quarter. On the MCX, oil prices rose by 0.9 percent to close at Rs.3621 per barrel.
We expect oil prices to trade higher given the anticipated output cuts by the OPEC nations will be a booster for oil markets. Inventory report due today will also be a close watch for clues on how the demand situation looks like in the near term. On the MCX, oil prices are expected to trade higher today, although international markets are trading lower by 0.2 percent at $53.14 per barrel.