Gold Trying To Inch Up After Latest Losing Spree

Gold.....
MCX Gold futures are trying to inch up today as buying interest returns after a massive slide in the last session. Gold slipped for a third session yesterday as traders locked further gains after recent array of gains ahead of the US FOMC meet. COMEX futures had edged up above $1470 per ounce earlier in the week but failed to hold on above the level as commodities witnessed yet another correction. However, some buying is emerging now as investors get over the latest FOMC statement and wait for the European banks turn today. COMEX Gold is quoting at $1452.60, up $6.40 per ounce on the day.

The Fed stated yesterday that information received since the Federal Open Market Committee met in March suggests that economic activity has been expanding at a moderate pace. Labor market conditions have shown some improvement in recent months, on balance, but the unemployment rate remains elevated.

Household spending and business fixed investment advanced, and the housing sector has strengthened further, but fiscal policy is restraining economic growth. Inflation has been running somewhat below the Committee's longer-run objective, apart from temporary variations that largely reflect fluctuations in energy prices. Longer-term inflation expectations have remained stable.

In fact, the Fed 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.

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.

However, the demand-supply scenario remains in favor of the metal. Total recycled gold supplies went up nearly 34% to 1,625 tonnes in CY 2012 from 1,212 tonnes in CY 2008 due to the massive spurt in prices last year. This source of inflow is surely likely to see moderation this year given the 20% drop witnessed in prices from year to date.

Prices have corrected more than 40 dollars in the current week and could edge up modestly now. The US dollar slipped to its two month low against the Euro yesterday and is quoting just under 1.3200 right now. This should support the yellow metal. MCX Gold futures broke under Rs 27000 per 10 grams this week and closed with heavy losses yesterday. The counter quotes at Rs 26554, up Rs 14 per 10 grams on the day with a marginal increase in open interest.
Source by Commodity Insights