Spot gold retreat yesterday on the back of an ambiguous Greek debt restructuring and the swinging dollar index propels the metal to loose value. The same has been observed in the futures in Comex and MCX division.
The dollar index settled down by 0.13% at 75.36 after it had an oscillation on anticipation of EU leaders’ Decision.
Global equities plunged amid uncertainties of European debt crisis and lower than expected US housing data led DJIA, FTSE to retreat.
European finance minister endorsed a bailout for Portugal, and, reprofiling of the Greek bond maturities which may be a part of a package including sales of state assets and deeper spending cut may take place as last year’s 110 billion Euro rescue failed to restore Greece to financial health.
Gold shattered after the hedge fund titan George Soros exit from the gold market by shedding five million shares held in the SPDR trust.
Holdings in the SPDR Gold Trust, the world's largest gold-backed exchange-traded further fell to 1192.25 tons from 1205.38 tons as on 16th May after the sell off came in.
The gold-silver ratio improved slightly to 44.19 from 43.67.
Outlook:
At the Globex platform Gold is seen trading $1490.90 up by $10.90 from the previous closing. The Asian equities are showing some confidence and the dollar index at present is weakening against the majors.
The Euro is appreciating against the dollar, on the back of which gold is reviving, after the talk of Greek debt restructuring weighed on risk sentiment and put a floor on the metal’s price.
The minutes of the Bank of England and FOMC meeting will be keenly watched today which might direct the dollar’s move.
Gold may gain strength as signs of financial turmoil in Europe will be bolstering demand for the precious metal as a store of value as because Ireland may be facing a second bailout as the nation remains locked out of credit markets spooked by concerns that they are unable to pay their debts.
Overall gold is likely to trade at a higher side with due considerations to the minutes of BOE and FOMC meetings. Hence it is recommended to be long for the metal.
Courtesy: Karvy Commtrade Ltd.
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