Gold closed in the red Wednesday, after spending most of the session in thin trading range. Gold made several attempts at gains but closed lower as some investors sold the metal after its recent high in the last three weeks.
US Federal Reserve also downgraded the growth outlook for the US economy and raised the prospects of deflation. US gold futures for August delivery edged down by 0.54% to $1207/oz on Comex.
Traders who bought gold in Euros are now selling to cut looses from strengthening Euro. The Euro gained for the second straight day against the dollar and closed 0.15% up yesterday.
The dollar fell nearly 0.3% against a basket of the world’s six major currencies, after the Fed demoted its economic growth prospects and raised the concerns of deflation. US advance retail sales also fell 0.5%, more than expected fall of 0.3%.
Equities closed marginally higher, thanks to Asian stock markets. European and US equities halted their six-day winning streak and closed lower yesterday. The benchmark MSCI world index for stocks ended 0.37% higher.
SPDR gold holdings remained unchanged at 1314.82 MT yesterday.
August futures MCX gold prices settled lower at Rs. 18,383/10 gm, down 0.35%.
Outlook
Gold is trading more than $5 up at $1212.10/oz in Asia on Comex’s globex platform, as the dollar index has weakened by more than 0.1% in its initial hours. The dollar looks weak after Fed downgrading its economic growth prospects and today’s economic data also suggest gloomy picture. US PPI, Empire manufacturing index and industrial production are declining from their prior numbers while continuing claims rise.
Moreover, strengthening euro may force investors to sell Euro-priced-gold which may have some negative impacts on bullion prices. Bullion will continue to take cues from currency markets. Actual data will further lead the market direction. KCTL sees a sideways to higher trading session in gold for the day.
