New York gold futures rose to another record as the dollar weakened against major currencies after a private report on U.S. payrolls showed unexpected job losses in September.
Central banks’ decision to purchase government bonds and slash interest rates is dampening the allure of bonds and currencies while increasing demand for precious metals as an alternative investment.
Key Observations
Gold for December delivery advanced $7.40, or 0.6%, to end at $1,347.70/oz. Gold hit session high of $1351/oz, the highest ever.
The dollar continues to be dismantled by traders around the globe. The U.S. unit fell 0.47% against a basket of the world’s six major currencies.
Stocks traded higher in Asia and Europe but lost steam in the U.S. after reports showed a decline in private sector jobs in September. However, the benchmark MSCI World index for stocks closed 0.53% up.
Total exchange-traded gold holdings were maintained at 1620.52 MT with SPDR gold holdings also remaining same at 1301.91 MT yesterday.
Rising rupee continues to spoil the party on MCX trading desk as MCX gold futures for December delivery gained only 0.05% to `19523/10gm, despite international gold futures posting remarkable gains.
Outlook
Gold appears to be on an unstoppable high run as the metal rose further to $1354/oz in Asian hours, defying gains in the dollar index (DXY 77.488, +0.13%).
Gold will continue to keep its momentum on the heels of the Bank of Japan’s surprise interest rate cut on Tuesday. Loose monetary policies will boost gold’s demand as a hedge against inflation and currency debasement.
Moreover, economic reports may show a rise in industrial production in the UK and Germany which may strengthen the euro against the dollar. Bank of England and European Central Bank will also announce their benchmark interest rates which will most probably remain same at 0.5% and 1%, respectively.
However, statements made by respective officials will be crucial and provide further insights about the economic situation in the eurozone. U.S. will also report jobless claims data which are expected to be marginally negative for the dollar.
KCTL supports gold’s bulls for the day. However, rupee appreciation may limit the gains on MCX desk.
