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Gold Recovers On Weak Dollar, Cautious In Wake Of Yellen Speech

April 16, 2014

Washington (Apr 16)   Gold recovered ahead of the release of the housing data and Yellen speech on monetary policy later today. Weak dollar aided upside in the commoditywhile gains were capped by china demand concerns for the current year. 

Demand for the precious metal continued to be underpinned amid escalating tensions between Russia and Ukraine as Ukrainian troops recaptured state buildings from armed pro-Russia separatists in the east of the country. Russia's President Vladimir Putin has warned that Ukraine is on the verge of civil war.

A major report published by the World Gold Council China's gold market: progress and prospects suggests that private sector demand for gold in China is set to increase 20% from the current level of 1,132 tonnes(t) per year to at least 1,350t by 20171. Following the record level of Chinese demand in 2013, which saw the country become the world's largest gold market, the report suggests that while 2014 is likely to see consolidation, the succeeding years are likely to see sustained growth.

Asian stocks posted gains on the back of better than expected first quarter growth figures from China, though other data showed a weak spot for March industrial production, while in Japan SoftBank pulled the Nikkei 225 higher.

Chian's first quarter GDP rose 7.4%, while March retail sales increased 12.2%, slightly above 12.1% expected, and March industrial output rose 8.8%, slightly below the 9.0% expected. Economists expected China GDP growth slowed to 7.3% year-on-year, from a gain of 7.7% in the previous quarter.

European stocks were sharply higher on Wednesday, as the release of upbeat economic growth data from China boosted risk appetite, while markets continued to monitor developments in Ukraine.

The euro rose against the dollar with the currency quotes at $1.3840, up 0.20 %from last close. US dollar index quotes at 79.79, down 0.09% over last close. 

Euro area annual inflation was 0.5% in March 2014, down from 0.7% in February. A year earlier the rate was 1.7 %. Monthly inflation was 0.9% in March 2014, as per the latest release fromEurostat. The core CPI fell to 0.70% from 1.10% in the last few months.

The COMEX Gold June contract quotes at $1,303.50 a troy ounce, up $3.20 and May contract quotes at $19.603 a troy ounce, up $0.114 from last close.

Local Gold futures recovered sharply tracking the gains in the international markets,weak local currency and hike in tariff value. Local currency fell to two weeks low against the dollar, with the Indian rupee quotes at Rs 60.40, up 0.29% from the previous close.

The tariff value for gold has been hiked marginally by 2.40% to US$431 per 10 grams, according to an official statement. Tariff value for silver has been kept almost steady at $646 per kg.

MCX Gold June contract quotes at Rs 28,570, down Rs 3, after hitting the low of Rs 28,315 per 10 grams. MCX Silver May delivery quotes at Rs 42,390, up Rs 101 per 1 kg.

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