Press Trust of India
New Delhi, August 6: Continuing its slide for the fourth consecutive day, gold prices Thursday dipped below Rs 25,000 by losing Rs 40 to trade at over four-year lows of Rs 24,980 per 10 grams at the domestic bullion market. Moreover, the precious metal was trading at five-year lows in the global market. Besides, there was an easing demand from jewellers as retailers deferred their buying plans on hopes of further dip in the yellow metal prices.
On the other hand, silver managed to recover some grounds on the back of scattered demand from consuming industries and rose by Rs 100 to Rs 33,800 per kg. Bullion traders saw a weak trend in gold where it traded at nearly five-year lows in global markets in anticipation of a possible rate hike by the US Federal Reserve in coming months.
The sentiment lifted dollar, eroding demand for the precious metal as an alternative investment, and dragged down gold prices to over four-year lows in the national capital. Drying up of demand from retailers as well as jewelers on hopes of further dip in prices too dampened trading sentiments, they said. Globally, gold in Singapore, which normally determines price trend on the domestic front, was trading lower at $1,085.08 an ounce, near the lowest level in five years.
In the national capital, gold of 99.9 and 99.5 per cent purity fell by Rs 40 each to Rs 24,980 and Rs 24,830 per 10 grams respectively, its weakest level since August 6, 2011. The precious metal has now lost Rs 280 in last three days. “Strengthening dollar, possible hike in rates by the US Fed and considerable fall in demand, dragged down the precious metal below the psychological Rs 25,000-mark,” said Rakesh Anand, a Delhi-based bullion trader. Tracking gold, sovereign fell by Rs 100 to close at Rs 22,100 per piece of eight grams. In contrast, silver ready managed to close higher by Rs 100 to Rs 33,800 per kg and weekly-based delivery by Rs 135 to Rs 33,565 per kg. Silver coins remained unchanged at Rs 48,000 for buying and Rs 49,000 for selling of 100 pieces.
Oil plunges to trade below $50
Oil traded near multi-month lows on Thursday with Brent under $50 a barrel as a supply glut persisted despite record US refinery runs, and little sign of any reduction in production. Brent crude futures were down 30 cents at $49.29 a barrel after dipping to $49.02 on Wednesday, the lowest since January 30. US crude was down 46 cents at $44.69 a barrel, just off an intraday low of $44.55.
“Prices are likely to consolidate or weaken further,” Carsten Fritsch, an oil analyst at Commerzbank, said. “The perception is that over-supply will be there for much longer.” Analysts at Goldman Sachs said in a note that because U.S. shale oil had dramatically reduced the time between when capital is committed and when oil is produced, prices needed to remain lower for longer to “keep capital sidelined and allow the rebalancing process to occur uninterrupted”. Although US crude oil inventories fell by more than expected last week, gasoline stock unexpectedly rose. Ole Hansen, senior commodity strategist at Saxo Bank, said this was an early indication that the US summer driving season was coming to a close. This raises the question as to what will happen when the peak gasoline demand season is over. Some US refiners are running at record high rates to take advantage of strong refining margins. But U.S. crude stocks remain at much higher levels than the long-term seasonal average, Fritsch said. “If they continue to run at these levels then we will see massive builds in distillates and gasoline stocks when the peak demand season is over for gasoline,” he said. It is therefore more likely that refiners will cut runs in response to falling margins or head into seasonal maintenance, leading to fresh builds in US crude stocks. September production from the North Sea’s Brent, Forties, Oseberg and Ekofisk crudes, which underpin the Brent benchmark, is expected to be the highest so far this year, at 1 million barrels per day (bpd). Meanwhile, OPEC oil output reached its highest monthly level in recent history in July and Iran is poised to return to the market. “Under the current Saudi oil policy, it is still more likely … that any sustained price recovery will come through another OPEC country breaking down than from North American crude oil production collapsing,” Olivier Jakob, an oil analyst at Petromatrix, said in a note.
