Gold Silver Prices declined on Monday. MCX Gold June futures fell to Rs. 28,152, the lowest price since April 2012. Comex Gold June futures sold off sharply today and Gold prices slumped to a fresh four-month low of $1,559 an ounce. MCX Silver July slipped to Rs. 53,463 & Comex Silver July Futures declined to $28.255. Gold futures saw modest losses during Asian trading hours which accelerated these declines during European electronic trading. Against the backdrop of European uncertainty, the dollar continued its climb higher. Gold prices fell lower hit by concerns about a worsening debt crisis in the euro zone following a political deadlock in Greece, while signs of China’s struggling economy also dampened sentiment. Chinese monetary authorities loosened monetary policy over the weekend by reducing reserve requirement ratios on domestic bank reserves. The move follows recent weaker-than-expected Chinese economic data. A stronger greenback adds further pressure to dollar-priced commodities such as gold, as it drives up to cost of the metal for holders of other currencies. Crude oil futures prices are yet trading sharply lower after hitting a 5-month of $93.65. Industrial production in the Eurozone contracted by 0.3% on the month in March and by 2.2% on the year. Eurostat also revised its estimate for February to show monthly production rose 0.8%, and fell 1.5% on the year. In Greece, anti-austerity Syriza party leader Alexis Tsipras has rejected calls to form coalition government and with no clear deal in sight, there is a possibility that new elections would have to be held.
Gold prices have a strong technical support at $1,540 on the downside & should ideally bounce up from this level. Silver has a strong technical support in the $28 to $26.20 range on the downside. Any breach with a sustained momentum below these levels may signal a strong bearish trend for Gold & Silver. Euro can expect to find support against the U.S.$ at current lows of 1.2853 & can rise.
Breadth and sentiment indicators along with technical analysis now convincingly suggest that gold & silver are nearing a major bottom. Silver price of $26 is the 50% retracement of its entire bull market. The current commercial Gold short position has reached a 3-year low while open interest recently touched a two and a half year low. Europe will have to embark on some major money printing likely by the end of the summer. Continued weakness in US data along with the strength in US bonds and the US dollar will facilitate the environment for the next round of Fed’s further Monetary easing action.