Gold traded lower in Asia which later picked up in European hours on account of renewed buying at lower levels. Gold pared its gains during US hours after Bernanke told current economic situations “unusual and uncertain.” Comex gold futures for August delivery eventually closed flat at $1191.80/oz.
Facts:
The Dollar index rose 0.7% yesterday, gains mainly imparted by weak Euro and Sterling. The Euro fell nearly 1% to $1.2754 on concerns of poor results of European banks’ stress test. The dollar index evaded from Bernanke’s disappointing testimony to the congress as it was released in late US hours.
Equity markets remained firm over Asian and European sessions. However, US markets took a beating as investors were spooked by Federal Reserve Chairman Ben Bernanke's downbeat assessment of the U.S. economic outlook. The benchmark MSCI world index for stocks ended 0.5% lower.
SPDR gold holdings were unchanged at 1308.13 MT.
MCX gold futures closed 0.14% up at Rs. 18,364/10 gm; as the metal was due to see some positive impact of the penultimate day. Stockists and traders in Mumbai also bought gold ahead of festive season.
Outlook
Gold has dipped in the red and now trades $7 down at $1184/oz in Asian trading as investors are spooked by Bernanke’s negative outlook on the US economy which was released after Comex’s floor trading was closed yesterday. Gold may remain lower initially which will attract some fresh buying. Moreover, the dollar also lost some grounds against the Yen in Asian trading which came in as a result of remarks made by Bernanke. The dollar index is down by more than 0.1% which may fall further on expectations of poor economic data from the US during the evening session. US existing home sales and housing price index data are falling from prior reported levels. Jobless data may also come mixed with initial jobless claims rising while continuing claims seeing a decline. Moreover, PMI numbers from the Euro zone are also expected to be weak. Currency markets may see volatile sessions which may result in investors buying gold against currency market fluctuations. KCTL recommends buying gold at lower levels.
