Gold rose to six-week high as more-than-expected jobless claims added to investors’ jitters and questioned the health of the global economy.
Apart from these short term developments, ETFs are also buying gold perceiving higher inflation down the line. Gold holdings in exchange traded funds rose for the second consecutive day.
Facts:
Comex gold futures for October delivery advanced 1.5% to $1215.40/oz. The dollar index strengthened further and settled 0.4% higher at 82.606 levels. Both gold and the dollar are attracting flight-to-quality demand amidst soft economic data from major economies of the world.
Equities weakened further on continued concerns of faltering global economic recovery. The benchmark MSCI world index for stocks closed down by 0.61%. Gold holdings in the world’s largest gold ETF, SPDR Gold Trust, increased by nearly 1 MT to 1286.70 MT, taking total gold holdings in the exchange traded funds to 1474.66 MT yesterday.
MCX gold futures also rose taking cues from firm international bullion prices. Gold closed 0.92% up at Rs. 18,550/10 gm on MCX. Rupee remained volatile and settled on depreciation note with 0.18% losses.
Outlook
Gold is unchanged at $1215/oz while the dollar index has taken small dips in Asian hours after having seen smart gains in recent sessions. Today, both Germany and Euro zone will announce their GDP data which are expected to show an expansion from their prior quarters. Euro zone’s trade deficit is also narrowing down.
The Euro has already gained nearly 0.3% against the dollar which could boost bullion prices during European hours. However, rising retail sales and improving household confidence in the US may snatch those gains as any positive economic data from the US will erode gold’s safe haven demand. KCTL expects limited upside in gold prices for the day.
Rupee also strengthened in its opening trades which could keep a lid on domestic bullion prices.
