Silver import curbs, war tensions to keep bullion market volatile next week

New Delhi, May 17: Gold and silver markets brace for a volatile week ahead amid the government’s latest curbs on silver imports, movement in crude oil prices and global uncertainty surrounding the US-Iran conflict, analysts said.
On the economic front, investors will closely track Chinese economic data, US housing numbers, PMI data, weekly jobless claims and minutes of the FOMC meeting, they added.
On the Multi Commodity Exchange (MCX), gold futures rose Rs 6,017, or 3.94 per cent, during the past week to settle at Rs 1.58 lakh per 10 grams. Silver futures also climbed Rs 9,964, or 3.8 per cent, to close at Rs 2.71 lakh per kg.
“Gold traded with a strong positive undertone last week, gaining nearly 4 per cent on MCX and closing around Rs 1,58,000. However, the rally was largely influenced by the recent 6 per cent import duty hike, which significantly lifted domestic prices despite weakness in international markets,” Jateen Trivedi, VP Research Analyst – Commodity and Currency, LKP Securities, said.
The silver import restriction doesn’t mean India has shut the door; it means the entry is now guarded. “Supply isn’t stopping, it’s being channelled only through nominated agencies like RBI banks, DGFT-approved entities, jewellers via the bullion exchange.” Two policy moves in three days point to forex management. Restricting silver imports eases immediate dollar outflow and reduces pressure on reserves, he added.
So while consumers will see higher domestic prices and wider spreads, the bigger play is about protecting the external account. Silver is just the instrument, forex is the driver, Trivedi said.
In contrast, international bullion prices remained under pressure last week.
Comex gold futures declined by USD 168.8, or 3.6 per cent during the last week, to close at USD 4,561.9 per ounce. Silver futures also slipped by USD 3.32, or 4.11 per cent during the past week to settle at USD 77.54 per ounce. “Gold prices took a breather last week and closed with a weekly loss, weighed by a sharp jump in the US dollar and bond yields globally – following higher than expected April inflation numbers released from most regions, including India, China, and the US, etc, raising bets that interest rate cuts are unlikely to come any time soon,” Pranav Mer, Vice President, EBG – Commodity & Currency Research, JM Financial Services Ltd, said. (PTI)