Gold Jumps Near Three-Week Highs Again

Gold...

MCX Gold futures edged up from their lows today as a bounce back was witnessed in the COMEX futures. The metal fell yesterday as traders booked profits ahead of the US FOMC meet though the worries triggered by the Cyprus banking crisis kept buying support in place for the yellow metal. Prices had surged to three-week highs of $1615 per ounce as Cypriot government rejected a EU proposed bank levy. Safe haven buying remained a feature of the trade today; supporting Gold as prices tested lows near $1600 per ounce. The counter quotes at $1613.40, up $5.90 per ounce on the day.

Cyprus remained in headlines as the ECB said today that it might cut off emergency help to the country if a bailout agreement can't be reached by the Monday deadline. This kept European equities under check. Markets also eyed weak economic data from the region. Market research group Markit said that its preliminary manufacturing purchasing managers' index fell to a seasonally adjusted 46.6 in March from a final reading of 47.9 in February.

Earlier in the week, Gold jumped even as the US dollar strengthened to a four-month high of 1.2844 against the Euro after the Cypriot government overwhelmingly rejected a EU proposed bank levy. Eurozone finance ministers have assured that they still stood ready to help Cyprus after the island's parliament voted down the bank deposit levy. This boosted the confidence of the market players and decent gains have trickled in the European equities today.

However, the US dollar slipped yesterday night after Federal Reserve Chairman Ben Bernanke said that the labor market is healing but the central bank will keep its aggressive easing stance until it is shown that the gains are durable. In its regular policy meeting yesterday, the Federal Reserve's FOMC announced that it is leaving the overnight lending rate unchanged at 0.25% or less and that it will continue its $85 billion per month asset purchase program.

Euro is struggling yet again today, lingering around 1.2900 levels against the US dollar. This might affect gold going ahead in the evening trades. The domestic Gold futures witnessed a good recovery today, bouncing from lows near Rs 29600 per 10 grams. The counter quotes at Rs 29700, up Rs 19 per 10 grams on the day with 1.36% drop in the open interest.
Source  by Commodity Insights