Gold futures spent most of the day in losses but later, rebounded on weaker-than-expected and prior existing home sales data which stoked gold’s safe haven appeal.
Gold hit the session low of $1210.90/oz but flight-to-quality buyers came into rescue for gold and boosted the bullion prices.
Key Observations
COMEX Gold October futures closed 0.40% up at $1232.20/oz yesterday. The dollar closed almost flat, loosing all its intra-day gains to declining existing home sales data.
The dollar rose as much as 0.52% to 83.559 against the world’s six major currencies, but later closed merely 0.03% up.
Equity markets remained weak on concerns of faltering global economic recovery.
Moreover, strengthening yen also dampened exporters’ stocks. The benchmark MSCI World index ended 1.35% up. SPDR Gold Trust reduced its gold holdings by 1.52 MT to 1297.95 MT, with total Exchange-traded gold holdings also declining to 1488.06 MT.
Domestic gold futures also traded in line with international gold futures and closed 0.61% higher at `18820/10gm. Sliding rupee further supplemented the gains in the bullion prices.
Outlook
Gold took slight dip in its initial hours and now trades at $1231.20/oz in Asia while the dollar index is also marginally up.
Yesterday’s gains came after weak economic data, which short-term oriented investors may not see a resumption of price rise. Some profit booking may be seen in initial hours which will drive prices down to allure more investors to get into the gold market.
Moreover, today’s economic data in the form of rising durable goods orders and no growth in new home sales may keep the dollar supported which will further keep the bullion prices lower initially.
However, KCTL expects new home sales may decline, considering a decline in existing home sales and housing starts activities.
The dollar may leave some of its grounds in case new home sales fall and thus, bullion is expected to gain in later sessions. KCTL recommends buying at lower levels for the day.
