New York gold futures recaptured their territory i.e. $1400/oz mark after European debt woes once again came into spotlight and increased bullion’s safe haven appeal.
However, both gold and dollar moved in same direction till European session but later gold left some grounds as the dollar progressed. Stronger dollar reduces bullion’s appeal.
Key Observations
December-delivery gold futures closed 0.29% up at $1403.30/oz. The dollar index closed 0.75% higher, its fifth consecutive daily gains. European debt concerns are keeping the dollar stronger.
Chinese inflation appeared to be 4.4% in October against 3.60% in the previous month. This also provided some boost to the bullion prices. Rising inflation may call for further monetary tightening in China. Asian stocks gained after two day of losses on better Chinese economic data.
However, U.S. equities tumbled as a disappointing outlook from Cisco Systems hurt technology stocks and weighed on the broader market. The benchmark MSCI World Index for stocks closed 0.18% down.
Total exchange-traded gold holdings continued to take a dip and lowered further to 1607.90 MT with SPDR gold holdings also falling to 1290.86 MT as on Nov 11, 2010. MCX gold futures for December-delivery closed 0.68% higher at `20371/10 gm yesterday.
Outlook
U.S. gold futures are heavily down by $13 to $1390/oz in Asian hours as the dollar strengthened on concerns of recurring debt woes in the Euro zone. Though both gold and the dollar are supposed to gain as a measure of safe haven assets amid European debt woes, yet investors fear to add fresh positions in gold at this stage as the dollar strengthens.
We may see some week-end profit taking in gold futures which could send prices lower. Moreover, economic data releases in the form of lowering growth in Eurozone’s third quarter GDP and industrial production indicator may also make the euro weaker. Market is expected to see run-of-the-mill traders booking profits in gold futures. We, at KCTL, carry a bearish view in gold for the day.
