Gold futures came off early gains but closed higher yesterday as sovereign issues continue to disturb the markets. Gold’s gains were moderated in the wake of the dollar index recovering in U.S. hours after the dollar once again rose on a possible dissolution of Irish Parliament in the New Year.
Now, this doesn’t seem to merely a liquidity crisis, it doubts the political prospects of the country which may lead to downgrade its country rating. Stocks in Europe and the U.S. fell amid such concerns.
Key Observations
Gold futures for December-delivery closed 0.41% higher at $1357.80/oz. The dollar index, which measures the greenback against a basket of six major currencies, recovered all the way from its intra-day losses and closed 0.23% up at 78.682 levels.
Ireland Prime Minister may call for parliament dissolution early next year which may weaken the country’s ability to deal with its prevailing debt issues.
Equities were up in Asian sessions on news of Ireland getting a bailout but soon, they turned negative after Ireland’s political stability issues came into limelight which made investors believe that debt issues may prevail for some more time.
The benchmark MSCI World Index for stocks closed 0.32% down. ETF holdings took a dip again with total exchange-traded gold holdings falling by 3.33 MT to 1603.83 MT.
SPDR gold holdings dropped 4.26 MT to 1285.08 MT. MCX gold futures for December-delivery closed 0.19% higher at `20140/10 gm yesterday.
Outlook
Gold futures for December-delivery is trading higher at $1361/oz on Globex, despite the dollar index also trading higher on Irish debt issues still prevailing in the market and increasing the dollar’s safe haven status.
Ireland political issues may also be a cause of concern for the markets which is also causing Asian stocks to trade lower.
Day ahead, important economic data in terms of U.S. GDP (growth revised upwards), personal consumption rising by 2.5%, improving Richmond Fed index and worsening European PMI numbers may add to the dollar index which will possibly deter the bullion prices to post any considerable gains.
However, existing home sales may decline which may snatch some gains from the dollar index. Markets will look for actual data releases for further price direction.
Prices will also be influenced by any news regarding to Irish elections which may prove to be fresh triggers for the markets.
