After remaining elevated throughout the day, gold retreated in the evening after the “Troika” wanted the pension cut to be elaborated. This again led to a failed approach to the final deal and disappointed the financial markets. The immediate delivery future fell 0.98% at COMEX and the same has been observed at MCX.
Global equities also remained conservative yesterday. Despite having a good start, European markets retreated later after Greek finance chiefs ended the meet without a final conclusion
The Euro slid following the report of a lack of deal and settled slightly lower against the dollar from the prior
Holdings of the SPDR trust, world’s largest gold backed exchange traded fund, remained unchanged at 1277 tons as on Feb.7
OUTLOOK
Gold futures are showing strength at the Globex platform. The Asian equities are trading at a choppy note, wavering in between gains and losses. The same is being seen in the Euro move. Although the initial indication from the ECB that they are willing to swap the Greek bond with EFSF were received enthusiastically, following comments hinted that this was far from being a done deal. This might push gold to down side today.
ECB today is set to announce its benchmark rate at the later part of the day. Although market expects the rate to be kept at the prior level, still anticipation of a rate cut aiming to ease paying off the debt lies down there.
Therefore, the Euro is likely to remain under stress ahead of the meeting. Besides, it is again three days to wait for the Greek deal to be finalized only after submission of the blueprint of pension cuts plan. From the US as well we expect the jobless claims to be lower form the prior after an unexpected jobs addition led the total un-employment three years low. Hence, gold is likely to be under pressure till the European session.
Nevertheless, it is another ECB meet in the next month in which they can consider the rate cut iff it remained same today. So, based on the final decision, market is expected to be volatile in the evening. An unchanged rate will be a supportive factor for both the Euro and the yellow metal.
From the above analysis, we may expect gold to remain under pressure for the day; while in the evening we might expect a pull back in prices.
Courtesy: Karvy Commtrade Ltd.
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