Commodities snapped up two-days of losses and world equity markets also returned to their gains after a possible financial assistance to Ireland by the IMF and EU.
New York gold futures recovered their losses it incurred in the beginning of the week, as the dollar erased its weekly gains which further lured investors back to gold market. Weakening dollar increased gold’s alternative investment demand.
The yellow metal saw some renewed buying interest after prices dropped to the lowest on Tuesday in more than three weeks.
Key Observations
Gold futures for December-delivery gained 1.20% to close at $1353/oz.
The dollar index, which measures the greenback against a basket of six major currencies, declined 0.63% to 78.585 yesterday.
The euro recovered on possible bailout package to Ireland which led a fall in the dollar.
The dollar’s declines were supported by positive economic reports from the U.S. in the form of falling jobless claims and improving manufacturing activities.
Bulls were seen getting back into action in stock markets also. The benchmark MSCI World Index for stocks closed 1.61% up.
ETF demand for gold remained low, suggested by continued decline in total exchange-traded gold holdings which lowered further to 1604.18 MT yesterday.
SPDR gold holdings also fell to 1286.30 MT. MCX gold futures for December-delivery closed 0.35% higher at `19980/10 gm.
Outlook
COMEX gold futures are trading tad higher at $1353.60/oz while the dollar index is also little changed. The dollar may remain lower on news of Irish officials accepting a bailout.
This could possibly generate gains for both the euro and yellow metal. However, upside could be limited as much of this news has been priced in yesterday.
Gold may trade higher in Asian sessions as Tokyo and Shanghai gold futures have set the tome in their opening trades. Gold in both markets is trading higher. Asian equities also advanced on bailout news.
Market sentiments seem to turn positive and investors may now be seen betting on riskier assets. Gold is expected to trade higher with limited upside.
