Gold settled up 0.22% at 28935 rose to a three-week high as simmering tensions in Ukraine fuelled buying. Market remained cautious on whether the gains can be sustained, however, as outflows from the top physical gold exchange-traded fund continued to indicate bearish sentiment.
Bullion’s safe-haven appeal increased after news that a street battle between supporters and opponents of Russia in southern Ukraine over the weekend killed at least 42 people, including dozens of pro-Russian protesters incinerated in a burning building, bringing the country closer to war. Global economic uncertainty after data showed a contraction in Chinese manufacturing that renewed concerns about a slowing economy in China also supported gold, and the market largely ignored a report showing upbeat U.S. service-sector activities.
Also the SPDR Gold Trust, said its holdings fell 2.70 tonnes to 782.85tns on Friday, bringing its outflow for the week to nearly 10 tonnes. On Friday, the metal fell to a one-week low of $1,276.60 after strong U.S. jobs data. But it reversed the losses to end the day up 1.3% on a sharp increase in the number of people dropping out of the workforce and rising Ukraine tensions.
Still, SPDR Gold Trust, said its holdings fell 2.70 tonnes to 782.85 tonnes on Friday – its third straight session of losses. Last week alone, the fund saw nearly 10 tonnes in outflows. Hedge funds and money managers cut their bullish bets in gold futures and options, as expectations of a stimulus cut by the Fed dented the metal’s appeal as a hedge, data from the CFTC showed on Friday.
Technically market is under short covering and getting support at 28861 and below same could see a test of 28786 level, And resistance is now likely to be seen at 29025, a move above could see prices testing 29114
MCX Silver Jul 2014
Silver settled up 0.16% at 42609 tracking gains from Comex Silver which advanced as escalating tensions over the crisis in Ukraine underpinned demand for traditional safe-haven assets. Demand for safe haven assets strengthened amid reports of heavy fighting between government forces and pro-Russian rebels in Slovyansk, Eastern Ukraine.
Market players are concerned that hostilities between Kiev and Russia will escalate further and drag the U.S. deeper into the standoff. U.S. Secretary of State John Kerry threatened Russia with additional sanctions on Sunday, unless the country stopped backing separatists in eastern Ukraine.
Meanwhile, market players continued to assess a report showing that the U.S. economy added jobs at the fastest pace in more than two years in April, but also showed weaker earnings growth and a drop in labor force participation. The Labor Department reported Friday that the U.S. economy added 288k jobs in April, well above expectations for jobs growth of 210k.
The U.S. unemployment rate dropped to a five-and-ahalf year low of 6.3%, compared to expectations for 6.6%. But optimism was tempered after the report also showed that the labor force participation rate, which measures the proportion of people either working or looking for work, fell to 62.8% from 63.2% in March. Meanwhile, average wage growth edged lower in April from the same month a year earlier, dampening the medium term inflation outlook.
Technically market is under short covering as market has witnessed drop in open interest by -1.8% to settled at 13568 while prices up 69 rupee, now Silver is getting support at 42367 and below same could see a test of 42126 level, And resistance is now likely to be seen at 42897, a move above could see prices testing 43186.