Gold Holds Above $1470, Non Farm Due In Some Time

Gold....

MCX Gold futures broke above Rs 27000 per 10 grams level today as the global prices raced higher for a second session. Gold has cut back its losses after the FOMC statement and a much-awaited cut in interest rates from the ECB yesterday made gold bulls come back from the hiding with a vengeance. The metal added around 20 dollars on the day yesterday. The sentiments in today's trade are likely to be choppy with the all important US non farm payrolls due in the evening and Gold could witness some selling pressure on the higher levels. The metal currently quotes at $1474, up $6 per ounce on the day.

The European Central Bank decided to lower its benchmark interest rate by 25 basis points to 0.50% yesterday, very much as expected. Data out today saw the European Commission cut its growth forecasts for the 17-nation euro area, noting that it now expects gross domestic product will shrink 0.4% this year, versus prior expectations for a drop of 0.3%. Growth fell 0.6% in 2012, which would make for two years of back-to-back contraction for the region after this year.

In its latest foreast, the EU said external demand will be a main driver to help bring the region out of contraction, while domestic investment and consumption will be a driver for 2014. But it said the labor market remains a serious concern, forecasting an 11.1% overall unemployment rate for the 17-nation region, and 12.2% in the euro zone. However, for the next year, growth is expected to rebound 1.6% in the 17-nation region.

Gold has been supported in the week on continued softening bias of global central bankers. Earlier in the week, the US Fed stated that it expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the asset purchase program ends and the economic recovery strengthens. This took aside the calls for an early end to the quantitative easing regime.

On Wednesday, China's official purchasing managers' index (PMI), which mainly focuses on the state-owned enterprise sector, fell to 50.6 in April from 50.9 in March, indicating a slowdown in manufacturing activity that was led by a slump in new export orders. A reading above 50 indicates expansion in the manufacturing sector while a reading below 50 means that manufacturing activity shrank.

Gold had tumbled in a freakish manner a few days back. There were concerns that debt stricken European country Cyprus might have to sell gold holdings to raise finances.
Traders fear that this would load up supplies in global markets in the short term. Massive unloading in Gold ETF's was also responsible for the worst crash in gold prices for three decades.

Gold corrected more than 40 dollars in the current week before the current upswing. The metal manages to hold well ahead of the non-farm amid thick gains in European equities. The MCX Gold futures have recaptured Rs 27000 per 10 grams mark and are currently trading at Rs 27108, up nearly Rs 200 per 10 grams with a 5.61% increase in open interest.

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