Gold futures have spiraled last month touching yet another all time high of $1072 per ounce in COMEX. The Dollar Index has lost 1.5% since last month and it is hovering in a range of 75-77.
Investment demand continues to be the key determinant of prices, in addition to the gyrations of the dollar. In addition to that, physical (jewellery) demand pumped into the market with the onset of Hindu festive season with Dhanteras and Diwali, in the midst of the month.
After the festive season got over, demand for physical gold remained slack with jewellery buying tailing off in major consumer India. So, investment demand which by its nature is fickle and currency movements are the major determinants impacting the market.
Russia is planning to sell as much as 50 tonnes of gold this year to help plug a budget deficit in the first major bullion sales by its precious metals repository since the fall of the Soviet Union, a high level source told Reuters. Gold registered a fresh lifetime high as the market peaked off at $1070/ounce in the month of October.
There was enough buying support seen throughout the month as the yellow metal tracked dollar weakness and physical demand. At MCX, prices managed to trade past Rs.16000/10 gm mark briefly for several times in the month, but failed to sustain the same.
It seems that the resistance of $1070 level will hold for a while. Gold has good support lying at $1024-28/oz region and with the overall positive sentiment still prevailing in the market, bulls should be eyeing the level to reenter the market. Directionally the current Bull Run in bullion prices can stretch towards $1100-1150/ounce.
Courtesy: Religare Commodities
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