Rupee trims gains for bullion in India
Bullion markets have witnessed range bound trade in the first few weeks of the fresh year, though the bias continues to be positive after healthy gains in 2012.
In the international markets, Spot gold has added around a percent YTD in Jan to trade near USD 1690 while Spot Silver, the one with higher beta has jumped more than 5pc during the same period to trade just under USD 32 per ounce.
The same thing however isn't reflected in their Indian counterparts as Bullion have been under consolidation in Indian markets lately.
Gold for Feb delivery at MCX commodity exchange stands near Rs 30600 /10 Gms (Down 0.75pc in Jan) whereas Silver for Mar delivery trades near Rs 59,600 /Kg has marginally outperform Gold with gains of 3pc this year. Low returns in Indian markets is a result of appreciation of Indian Rupee which has gained around 2pc to the US Dollar since Dec 31st closing.
The recent uptick in Gold and Silver is based on the fact that the US has partially averted the threat of fiscal cliff wherein the government has timely managed to head-off USD 600 to USD 700 Bln of higher taxes and automated spending cuts by clearing the important fiscal bill.
However, the current bill only addresses part of the problem as the US congress has left major issues related to spending cuts and debate over US debt ceiling limit open.
Over the next couple of weeks we should be ready to see indecisive movement with a mix of up's and downs in Gold and Silver as US Policy makers meet on whether or not to raise the nation's debt ceiling, which expires in February.
In very near-term if Gold is able to move above psychological resistance of USD 1700, we may see gains building to USD 1725 and later towards USD 1760 an ounce.
Silver on the other side could record better performance to USD 32.78 and later to USD 33.50 per ounce. Downside in short-term is seen limited to USD 1660 and USD 31 an ounce.
(The author - Tapan Trivedi - is Senior Research Analyst, Inditrade Derivatives and Commodities limited)