Metal/Weekly: Gold may fall easing euro-zone worries, weak demand
MUMBAI, FEB 14 : Gold may extend fall next week on easing worries in euro-zone and on weak demand for the gold in the global market, said analysts.
"Gold may fall as easing worries in euro-zone and Russia dents safe have appeal of the metal and on weak consumption demand," said Gajanan Bolewar an analyst with Fortune Commodities & Derivatives.
Bullion prices will fall as investors hoped that debt ridden Greece will reach a compromise with Europe creditors and as an uptick in retail inflation weighed on risk appetite.
Thursday, Greece agreed to talk to its creditors to reach a compromise with international lenders.
Prime Minister Alexis Tsipras, attending his first European Union summit, agreed with the chairman of euro zone finance ministers, Jeroen Dijsselbloem, that Greek officials would meet representatives of the European Commission, the European Central Bank and the IMF on Friday.
The shift by Tsipras marked an initial step towards resolving a crisis that has raised the risk of Greece being forced out of the euro, which could trigger financial contagion.
Earlier this week, reports suggested that there was no deal yet between the euro-zone finance ministers over the Greece debt situation and the Greek government officials instated there could be no extension of the bailout.
Price of the bullion will also be under pressure on after Russian President Valdimir Putin,yesterday, said that a cease-fire starting on Feb 15, with each side pulling back heavy weapons from east Ukraine region.
Ukrainian Foreign Minister Pavlo Klimkin also said that the deal had been reached after 17 hours of talks in the Belarus capital of Minsk.
Prices of the bullion will also be under pressure on fear that United States Federal Reserve may hike interest rate sooner than expectation, said analysts.
Fed member John Williams suggested that economic conditions are getting closer and closer to those where it makes sense to really start thinking seriously about starting this process of normalization.
Prices of the yellow metal will also be under pressure on fear that demand side remains weak as the World Gold council said that global gold demand fell in 2014 to a five year low.
Global gold demand dropped 4% to 3,924 tons in the 12 months ended December on weak demand from China amid lower purchase of bars and coin.
Bars and coins demand dropped to 1,063.6 tons compared to 1,765.4 tons a year go.
China's full-year purchase of gold fell 33% on year to 813.6 tons, it still represents the second best year for jewellery demand in China since records began in 1995.
"Chinese gold demand returned to those last seen in 2011/2012 as consumers and investors took time to digest the substantial volumes accumulated in 2013," said Grubb.
Gold for April contract traded in Rs 26,990-26,508 per 10 grams range in this week.
Resistance for February gold prices is seen at Rs 27,400 per 10 grams level and price may get support at Rs 25,700 per 10 grams level in this week.
Silver may also fall this week taking cue from prices of the gold, analysts said.
In the last five trading sessions, silver for March delivery traded in Rs 37,964-37,050 per kilogram range.
Resistance for March silver prices seen at Rs 36,700 per 10 grams level and price may get support at Rs 39,000 per 10 grams level in this week.
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