It was an unfortunate weeks for the yellow metal. Global spot gold price tumbled 3.3 per cent and has closed at $1,249.68 per ounce last week after recording a low of $1,242.33.
On the domestic front, gold futures traded on the Multi Commodity Exchange fell 1.8 per cent to close at Rs.26, 863 per 10 gm. Silver cut down 3.3 per cent to 18.82 per ounce and platinum was down 1.4 per cent to $1451.94.
Risk appetite increased in the market as the Ukraine tension relieved after the US officials confirmed that Russia has pulled its troops from the Ukraine border.
Also, better-than-expected US economic data releases at the beginning of the week eclipsed the weak gross domestic product (GDP) and the consumer spending data that were released in the later part of the week. It made gold lose its luster.
Therefore, Investors appear to have shifted their focus from the safe haven to stocks.
US data
The US GDP, according to the second estimates is forecasted to fall 1 per cent in the first quarter of 2014 as against the 0.1 per cent growth projected in the previous estimate.
The consumer expenditure for April fell 0.1 per cent after rising 1 per cent in the previous month.
The manufacturing purchasing managers’ index (PMI) data on Monday and the non-farm payroll and unemployment rate release on Friday are important data points which could influence gold price movement.
Cues to watch:
The European Central Bank’s (ECB) meeting on Thursday is an important event to watch.
The ECB had indicates that it is open to easing its policy in June. Any stimulus announcement from the ECB this week could trigger a sharp rise in the dollar, thereby putting pressure on gold.
The outcome of the Reserve Bank of India’s credit policy on Tuesday will be significant.
The short-term outlook for the rupee looks weak. This could limit the fall in domestic gold price to some extent as compared with the global price.
On the charts:
The short-term outlook for the global spot gold price has turned bearish. The lack of ability to breach the psychological level of $1,300 for about five consecutive weeks that was followed by a sharp fall last week reflects lack of momentum for the price to rally.
This could keep a tight rein on the upside and cap it at $1,300 in the coming weeks and keep the yellow metal under pressure.