Gold closed higher Tuesday after having traded down to 2- month lows in Asia which prompted many bottom-fishers to grab the metal. However, gains may have been limited by increased investor focus on the risk of deflation. Gold’s flight-to-safety has not been evident at the moment alongside diminished debt concerns in Europe after Spain and Greece successfully auctioned off Treasury bills Tuesday.
Facts:
US gold futures for August delivery added 0.83% gains to close at $1191.70/oz. Prices recovered from intraday low of $1175.10/oz.
The dollar index regained some of its lost grounds and closed 0.33% higher at 82.783 levels. The dollar also rose after reports said that building permits rose more than expected in June, suggesting higher demand for homes in future. The Euro failed to hold further gains and fell against the dollar by 0.5% to $1.2880.
The benchmark MSCI world index for stocks closed 0.4% up, supported by US markets which rose on positive results posted by Apple Inc.
SPDR gold holdings fell to 1308.13 MT yesterday. MCX gold futures tanked higher by 0.45% to closed at Rs. 18,339/10 gm. Indian rupee slid further by more than 0.5% to 47.3637/USD.
Outlook
Gold trades tad down at $1190.50/oz in Asia while the dollar index is also slightly down. There are no major economic data scheduled for the day and hence, markets may lack momentary triggers. Gold may see some renewed buying after prices took a dip to 2-month low levels yesterday. There are still a lot of bottom-fishers in the market, despite gold’s flight-to-safety has diminished as investors confidence seems to be restored in European sovereigns. Greece and Spain successfully auctioned off their Treasury bills. The dollar is weakening slightly ahead of testimony to congress by the Federal Researve Chairman Ben Bernanke. KCTL recommends buying at lower levels for the day.
