Gold futures rallied yesterday on news that Greece had struck a deal with the “Troika” in an emergency meeting. Greece gets their second bailout in exchange for deeper austerity.
Amid such optimism Euro also rallied and the immediate delivery future also gained over half a percent at the COMEX. The same has been observed at the MCX
Global equities cheered the Greek austerity deal and settled with modest gains. Also, the fall in jobless claims might have raised the investors’ risk appetite
The Euro strengthened against the dollar on optimism of Greek leaders are taking steps toward securing a second bailout package for the nation
Holdings of the SPDR trust, world’s largest gold backed exchange traded fund, increased to 1278.34 tons from 1277 tons as on Feb.9
OUTLOOK
Rising hopes of a second bailout for Greece added strength to Gold, but at present futures prices are trading at a slight lower note at the Globex.
Asian stocks fell and the Euro weakens as well, as the international leaders held back a rescue plan for Greece for ratification of the reforms.
The Australian dollar also declines and thereby creating pressure on the metal as it shares a strong positive correlation with gold.
Going ahead we expect gold to remain little weak in the morning session owing to the sekptic thought by IMF but it is likely to get support in the evening from the weak US releases.
Greece needs to implement the largest austerity measure to block 325million Euros spending before the international leaders endorse a second bailout fund.
However, the ministers are scheduled to meet next Wednesday and are expected to approve rescue funds provided Greece has taken the necessary steps.
But, IMF on the other hand showed skepticism on the reality that 130billion simply is not enough. In the meantime there is another strike planned today amid the mounting additional austerity which might lead to a civil unrest.
Euro therefore might remain under pressure. Said above we may expect gold to be volatile for the day. It may take a cue from the weak Euro and is likely to move down.
Nonetheless, we can not ignore the safe haven demand amid political and civil unrest from Greece which may lift prices.
From the economic data front, the US trade deficit for December might widen as stronger dollar, weakness in Europe and a slowdown in China may lead to softer growth in export.
Michigan confidence it still likely to remain slight weak after Fed gave a dovish outlook for the economy. Hence, gold is likely to remain quite volatile for the day with anticipation to a price gain in the evening owing to the weak US economic releases.
Courtesy: Karvy Commtrade Ltd.
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