MCX Gold Swells On Weak Rupee, COMEX Under Pressure

Gold.......

MCX Gold

futures are lingering around Rs 28000 per 10-gram levels as global prices consolidated around $1380 per ounce mark in Asian trades. The commodity is moving in a fairly tight range ahead of the all important US Fed meet tomorrow though selling pressure is evident on rallies. Prices failed to hold on above $1390 per ounce in last session and extended these losses today as well. The counter quotes at $1378.20, down $4.90 per ounce on the day. The dollar is ticking higher after falling to its four month low against the Euro last week as traders contemplate about a possible “tapering” comment from the Fed this week.

Meanwhile, the Asian markets are trading mixed today. The Chinese economic activity appeared to be expanding at a steady pace, driven by strong investment growth, with both infrastructure and real estate investment continuing to grow strongly, noted the Reserve Bank Of Australia (RBA) in its latest monetary policy minutes. The residential property market in China remained buoyant in April, although members observed that recently announced controls could weigh on activity in coming months, depending on how widely and strictly they were enforced.

Available indicators suggested that the US economy was continuing on a path of moderate growth. Household consumption was being supported by improving conditions in the housing and labor markets. However, recent indicators suggested that conditions in the manufacturing sector had been somewhat subdued in April and May. Members noted that the euro area remained in recession, with output falling in most countries in the March quarter. More timely data indicated that economic conditions remained weak.

Local gold remains supported on weak Indian Rupee. The Indian rupee plunged once again, breaching the Rs 58 per dollar mark due to renewed dollar demand from importers and appreciation of the US currency overseas. There has been a massive rise in Gold imports after the prices fell around Rs 26000 per 10-gram mark in April. India's gold and silver imports surged by a whopping 89.7% year-on-year to $8.39 billion in May this year. 

The government has initiated a number of measures to curb the ferocious rise in local offtake thereafter, most notable being a hike in import duty to 8%. This has reportedly put some breaks on the demand but still there is a possibility that dips in prices would see resumption of gold buying. MCX Gold futures for August are trading at Rs 28012, up Rs 143 or nearly half a percent with a massive 9% increase in open interest.

Source by Commodity Insights