August futures gold prices almost traded lower on yesterday’s Asia and European trading session with perceiving an intraday low of $1226.90 but it rebounded during US session and ended on a higher note at $1241.40 levels. Hence, it closed marginally higher from Monday’s close. Gold futures rebounded as the sharp drop in equity market sparkled buying of the precious metal as a safe haven avenue. The other precious metals platinum also recoiled higher.
Moreover, the data released by US in the form of consumer confidence index plummeted to 52.9 in June, which is the lowest point since March. This data has declined beyond the economists’ expectation of 62.8.
If we look at the reason for substantial decline of U.S equity market, could be the reason that the private banks may fail to repay 442 billion Euros to the European central bank (ECB) before a 12 month ECB loan expires on coming Thursday.
Outlook:
Currently at Globex electronic platform gold futures prices are trading marginally higher at around $1243 levels. This rise may continue as the Asian equities are likely to trade lower.
However, if equity investors make some profit booking from yesterdays fall then a slight decline can be expected on gold prices. However, going by the current situation this relation may not have much effect on the bullion market and gold may remain higher during the day. If we look at the economic data releases we have euro zone CPI data for the month of June.
The expectation is to decline to 1.5% where as the previous figure was at 1.6%. Any further decline may have a negative impact on the euro. However, we believe this data effect might have been discounted on yesterdays move.
On the whole, we expect gold prices may trade higher during Asian session and the actual data from Euro zone can give a fresh trend to gold price. Likewise, in the US trading session we may see gold trading sideways to higher.
