MUMBAI (Commodity Online): Gold dropped under $1540 per ounce, witnessing persistent selling pressure after failing to hold on above $1550 yesterday.
The stock markets were mixed around the world with a bearish bias and Gold was looking weak on profit selling pressure and slightly overbought technical cues. Crude oil prices dropped as well and traders covered their recent longs in Gold as the US dollar came off its lows.
The developing countries need to refocus their economies to prevent overheating and damage from commodity-price inflation to preserve strong growth and avoid a hard landing, the World Bank said today.
With the crisis-fighting stage of the recovery behind them, emerging markets need to move towards a more neutral stance in terms of fiscal and monetary policy, and recreate the fiscal space that was there before the crisis, said Andrew Burns, a lead author of the Bank's Global Economic Prospects update.
In some of the biggest developing economies, such as China, India and Brazil, that are at their production capacity limits, authorities should accelerate tightening interest rates, slash government spending, and in some cases appreciate their currencies.
The United Nations has proposed a tax on commodity transactions, and government intervention in markets, to curb the speculation that the organisation believes is artificially lifting prices, and volatility, of raw materials, according to media reports. The UN's trade and development body, Unctad, proposed a series of measures to tackle the market distortions which have increasingly jeopardised the ability of futures exchanges to determine appropriate prices for commodities.
Currency markets were mostly unmoved at the start but the US dollar reflected some underlying strength after nearing 1.4700 levels against the Euro. Gold fell under $1540 following this and currently quotes at $1535.40 per ounce, down $8.60 per ounce on the day. Dollar is quoting at 1.4630 against the Euro. MCX Gold futures for August are trading at Rs 22525, down Rs 97 or 0.43% on the day.
