Gold future dropped from its record high of $1915 to settle 1.61% below prior closing as the global equities rebound and amid speculating that the Fed chairman will signal further measures to stimulate the US economy later this week. Immediate absorption of this anticipation acted adversely to pull the metal down. Same has been seen at the MCX.
The dollar index lost the ground to settle at 0.28% lower than the prior amid weaker data releases from the US spurring concern about a flagging economy
Global stocks rallied as investors speculated the Fed will act to spur the economy. US equities gained the most by three percent while Europe and Asian stocks also gained modestly
Holdings in the SPDR Gold Trust, the world's largest goldbacked exchange-traded fund slid to 1259.56 tons from 1284.40 tons as on 23rd Aug after the correction took place
The gold-silver ratio improved to 43.97 from 43.61
OUTLOOK
At the Globex platform gold is presently down by $6.80, at $1852.40 before which at the early Asian hours it made a low of $1830.40.
A little stability in the global stock market might have triggered this liquidation after gold rose for the straight seventh week. Asian equities at present is trading flat, mostly at a down side as Japan’s credit rating was lowered by the Moody’s services by one step to “Aa3” which cited weak prospects for economic growth.
Japan’s government unveiled a $100 billion effort designed to cope with persistent strength in the yen that threatens to spoil the nation’s recovery from three straight quarters of economic contraction. Optimism about more Fed stimulus grew after Richmond’s manufacturing index dropped to -10 yesterday. The dollar index is therefore at a strong side at present which might pressurize the metal for the day.
From the economic data front, German IFO numbers along with Euro zone industrial orders are likely to remain at a lower side after the area’s economic sentiment, consumer confidence and manufacturing fell. In the evening, the US house price index may fall after the sector plunged heavily due to lower demand and income of the people.
So, there is a little hope that gold might get a boost in the evening but it might no be having so much strength to recover the early losses. Overall, gold is poised for a correction and hence is recommended to remain on sell side at higher prices for the day.
Courtesy: Karvy Commtrade Ltd.
Get Trading Tips that suits your kind of investment
