Gold, after trading in a sluggish manner throughout the morning session, revived in the evening after China unexpectedly tighten their monetary policy.
The dollar index declined against the Euro and other major currencies after China surprisingly tightened monetary policy by hiking reserve rate to drain cash from the economy.
Global equities settled at a positive tune. A pair of US economic releases bolstered equities as well as hopes that the US economy has not yet slipped back into recession.
Greece was branded with the world’s lowest credit rating by the S&P yesterday.
Holdings in the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund further slid to 1200.05 tons from 1200.95 tons as on 14th June.
The gold-silver ratio slid slightly to 43.04 from 43.63 as on yesterday.
Outlook:
At the Globex platform gold is seen trading at $1526.10, up by $1.70 Asian equities are trading mostly at positive side except Chinese equities which are paring gains on the back of hike in reserve requirements by the central bank of China.
The Euro is depreciating against the dollar amid concern over EU deadlock on Greece rescue is leading the dollar index to gain which at present is stronger by 0.121% from the prior closing.
EU officials struggled yesterday to find any permanent solution of Greek debt involving investors on a second round of rescue without triggering a default. They may need more time to reach a deal.
So, the Greek dilemma is likely to continue for some ore time to have a solution. Euro treasuries yield fell boosting the demand for the relative safe investment which led gold to revive in the evening session.
Coming to the economic data front, the US net long term TIC flows are likely to increase, which indicates that more capital is entering the US than leaving as American securities to foreigners exceed American purchases of foreign securities. Along with that, the industrial production and capacity utilization is expected to improve also. Hence, dollar may get a boost from there.
Overall, gold is likely to remain under stress to the extent of dollar’s gain. The rupee appreciation at present will also be limiting the upside. Hence, it is likely for gold to trade in a range tending towards a downside in the evening.
