On Tuesday night, some large investment banks downgraded the oil price outlook.
Gold, silver, and base metals traded lower on the Multi Commodity Exchange (MCX) on Wednesday. Market sentiment took another hit after the US treasury secretary said the current economic crisis was worse than that of 2008.
Gold and silver remained volatile, with a downward bias. The gold to silver price ratio was trading above 121, a lifetime high, indicating extreme weakness in silver. In the past 10 days, gold has fallen eight per cent and the price of silver by 25 per cent.
At the spot market here, though, standard gold rose 1.6 per cent to close at Rs 40,375 per 10 g, and silver closed 1.1 per cent higher at Rs 35,515 per kg. The spot market was higher, as it reflected the level of Tuesday evening. Since Monday, there has been a shortage of silver for ready physical delivery, with the per kilo price for this being at a premium of Rs 1,500-2,000.
Ajay Kedia, director, Kedia Advisory, said: “The bullion market is under the immense pressure of margin calls, as erosion continues with selling in the global equity market. The market is forecasting a global recession this year. Investors and traders are running for cash from whichever asset available. Bullion prices, with high volatility, will bounce rather hard but this won’t hold. We can again see gold testing the $1,440 (an oz) level and silver might test $10.8 if it falls below $12 decisively.”
With global analysts downgrading their crude oil price projection to as low as $20 a barrel, its futures price on the Multi Commodity Exchange fell another 12 per cent on Wednesday, to trade at Rs 1,844 per barrel, a four-year low.
On Tuesday night, some large investment banks downgraded the oil price outlook. London-based Natixis cut it much lower than its forecast at the beginning of the year, saying: “We now expect Brent to average $46/barrel in 2020.”