Gold fell yesterday on stronger dollar which gained considerably against the euro and the Pound. UK’s widening trade deficit lifted the dollar and undermined alternative investment demand for precious metals.

Gold also came under pressure after China denied considering gold as reserve investment to diversify its forex reserves. However, the yellow metal recovered from its intra-day low of $1,108.20/oz to close at $1,122.30/oz, on strike concerns in one of the silver mines in Peru which is the largest producer of silver and sixth largest of gold.

US gold futures for April month delivery slipped 0.15 percent to $1,122.30/oz.

The dollar index closed 0.20 percent up at 80.592. The dollar rose amid sovereign debt worries after Fitch Ratings said on Tuesday it still has a negative outlook on Portugal's double-A ratings.

The MSCI world index for stocks rose further by 3 percent yesterday.

Crude oil prices fell 0.46 percent to $81.49/barrel. SPDR Gold holdings remained unchanged at 1116.12 MT as on Mar 9.

MCX gold futures for immediate delivery fluctuated between Rs. 16,581 and Rs. 16,753/10 gm before closing marginally down at Rs. 16,727/10 gm. Indian rupee depreciated by 0.23 percent to 45.6350 and limited the fall of domestic gold futures on MCX.

Outlook

Gold steadies in Asia at $1,123.50/oz while the dollar index is little changed. US wholesale inventories are rising further and thus showing weaker demand which could hurt the dollar during the day. German trade surplus is also rising which also helps the euro will recover after yesterday’s losses. Gold may trade sideways to higher for the day. Some investors may find current gold prices as good bargain. MCX gold futures may open flat with some upside expected for the day.

Courtesy: Karvy Commtrade Ltd.

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