II:Gold Stays Tight On Falling Equities & Rising Dollar
Gold futures are trading in an extremely tight range in the mid day Asia with the losses in the equities trying to pull it up while on the other hand the gains in the US dollar are reducing the appeal for metal as a safe haven.
The U.S. dollar rose further against the euro and various “risk currencies” Friday, as news updates on the ongoing European Union summit offered disappointment. The dollar index, a measure of the greenback's performance against six other major currencies, rose to 78.848 from 78.789 in North American trade Thursday, as investors chased assets perceived to be safe. The dollar's move higher came after reports that leaders of the 27-member European Union sealed a new fiscal pact for budget discipline, but failed to agree on a treaty change for closer fiscal ties. A deal may now just involve the 17 nations that share the euro, plus others who may want to join.
Gold for February delivery lost $1.20, or 0.1%, to $1,712.70 an ounce on the Comex division of the New York Mercantile Exchange during Asian trading hours.
The ECB had on Thursday cut its benchmark interest rate by 0.25 percentage points to 1%, as expected. But central-bank chief Draghi dashed hopes the ECB would step up purchases of bonds issued by euro-zone nations affected more severely by the debt crisis. A closely-watched European Union summit failed to secure the full backing of the 27 nations for treaty changes to help fight the region's debt crisis by coordinating fiscal policy.
However, many members reached an agreement to provide up to an extra 200 billion euros ($266.73 billion) to fight the crisis and to form a new fiscal compact. European Council President Herman Van Rompuy said in a press conference after the end of the first day of the summit that euro-area and other European states will aim to make the extra money available to the International Monetary Fund.
MCX benchmark gold futures are trading up over Rs. 30 at Rs. 29121 per 10 grams. The traders may sell it with the target of Rs. 28900 and Rs. 28670 levels with stop los at Rs. 29170.
