Spot gold remained down this month due to the strength seen in dollar. US$ Index which is a measure of dollar against a basket of six major currencies increased by around 4% this month thus putting pressure on the prices of gold which moves in opposite direction to the dollar. Another factor which pulled the prices down is concerns about global inflation.
The inflationary figures of various economies are still near all time lows and since gold is considered as a hedge against inflation the prices can further remain subdued. The investor demand also remained low this month as the holdings with the world's biggest ETF remained unchanged for most of the month. Gold traded in a range for June, with market failing to take out 15000 on the upside and 14000 on the way down.
Trading platform that even a 5 year old can trade. Join now Price activity has been confined within these levels at the MCX since April and it seems that market will need some sustained buying/selling pressure for the range to break. In the international market, the yellow metal has resistance at $960/ounce, on breach of which market is likely to inch toward $980-990/ounce mark, and crucial support pegged at $912/ounce.
Gold has been closely tracking dollar weakness of late, something it had stopped in the period between December 2008 and March 2009. This means that if recession and deflation is to continue in US, the greenback should strengthen over time, pressurizing the yellow metal.
Courtesy: Religare Commodities Explore Commodity Online Mobile Services
