Gold Smashed, Smart Intraday Recovery Offers Support Though

Gold.......

MCX Gold

slipped perilously close to Rs 25000, mimicking its last month's moves as the metal was hurt yet again in the global markets. COMEX Gold tanked towards its previous month's lows yet again, toppling to a low of $1336.30 per ounce before edging up in afternoon. The metal is currently trading at $1356.40, down $8.30 per ounce on the day. The commodity has shed nearly $150 in the last three weeks.

Meanwhile, the Euro remained pressed though the single currency managed to bounce from its six week lows against the US dollar. European leaders gather this week for a summit, which is likely to focus on the rampant unemployment in the region and the deepening recession. The one-day talks on Wednesday were dedicated weeks ago to the political fight to uncover unpaid taxes hidden away in Swiss or even EU bank vaults. When the leaders gather at the European Union headquarters in Brussels, overshadowing the talks will be the bloc's 26 million jobless and the eurozone's longest recession in history - 18 months and counting. This is likely to keep the recovery in Euro muted.

Meanwhile, the dollar has been supported on ideas that the Fed would be looking to cut back on its asset purchases at a optimal time in case the economic signs warrant. Dollar index shot up to a ten month high last week, sending Gold prices for a toss. The World Gold Council (WGC) reported that a rise in physical gold demand failed to offset outflows from gold-exchanged traded funds in the first quarter of the current year. Investors didn't buy enough physical gold to offset outflows from gold-exchanged traded funds in the first quarter, but total ETF gold holdings were still higher than a year ago, and demand for jewelry, bars and coins grew a lot thanks to China and India, a report from the World Gold Council released last week showed.

The WGC noted that total jewelry demand climbed 12% in the first quarter, compared with the same time a year ago. Jewelry demand from China and India soared by 19% and 15% respectively. However, total world gold demand was 963 metric tons in the first quarter, down 13% from the same time a year ago and 19% below the fourth quarter of 2012, according to the WGC report.

The Asian equity markets came of their highs today and a similar undertone in being witnessed in European stocks too. Investors seem to be getting a little nervous as global equities linger around their five-year highs and this is in turn supporting Gold. Indeed, the metal went up nearly 20 dollars in intraday moves today. The local spot markets could also witness a pick up in demand soon the spot prices fall near the previous month's lows. The MCX Gold futures for June are trading at Rs 25615 per 10 grams, down Rs 220 per 10 grams or 0.85% on the day. Prices slipped to a low of Rs 25373 per 10 grams earlier in the session.

Source by Commodity Insights