Gold eased back towards its seven week lows yet again as the US dollar maintained its gains and lack of buying support going into the year-end capped the upside for the yellow metal. Gold tumbled to seven-week lows of $1622.50 per ounce in Asian trades and managed to recover on bargain buying thereafter only to face a critical hurdle around $1640 per ounce levels. Dollar is almost about to hit the jackpot 1.3000 mark against the Euro.
European Commission chief Jose Manuel Barroso said Tuesday that a demand by Britain for its financial services industry to be exempted from EU regulation threatened to break up the single market. Barroso was speaking during a debate in the European Parliament on a European Union summit in which 26 of the 27 EU states agreed a new deal for fiscal and economic integration -- but which British Prime Minister David Cameron refused to accept.
The US dollar is quoting around its highest levels in the current year on continued risk aversion and the approaching year-end lull in financial markets. Most Asian markets fell today as US Federal Reserve stopped short from signaling another round of asset purchases and concern about the fallout from European debt troubles kept buyers away.
The Euro extended its downward run to test a two month low against the US dollar in Asian trades today as the plans hatched in the latest EU summit failed to boost investor confidence and doubts persisted about how the policymakers are going to stem Europe's debt crisis. The ratings agencies welcomed the latest EU steps with a lukewarm response, in turn pressurizing the world markets and assisting the US dollar to rally as safe haven demand surged.
Officials of the US central bank stated yesterday that the economy has grown moderately, and they kept the key interest rate steady at ultra-low levels, a range of zero to 0.25 percent, where it has been for about three years. Tuesday's report from the Federal Reserve also said global growth is slowing, perhaps a reference to Europe's debt crisis that has troubled financial markets and worried investors. The Fed statement said the housing sector is depressed and called unemployment elevated. Fed officials predict the U.S. jobless rate will decline slowly.
European stocks have extended their early declines with the FTSE, DAX and CAC down 1-1.5%. The Dollar is quoting at 1.3007 against the Euro, bringing its gains over the month to 6%. Gold is down $30.50 per ounce at $$1632.60 per ounce. The commodity has dropped heavily after breaking under its EMA 100 on the daily charts earlier in the week. MX Gold futures are down Rs. 105 or 0.71% at Rs. 28666 right now.
