MCX Gold futures gave away their early gains and slipped in the afternoon as the global prices continued to witness selling pressure amid a weak undertone in the Euro. The metal had plummeted to its seven month low as minutes of the latest FOMC meeting showed policy makers were divided about the strategy behind Chairman Ben Bernanke's program of buying bonds. The metal had slipped to a low near $1550 per ounce last night but jumped from these levels on bargain hunting. The counter came off highs near $1590 per ounce today and currently trades at $1580 per ounce, up $1.40 per ounce on the day.
Euro stayed under pressure today and tested its seven week low under 1.3160 against the US dollar, dropping for a third session in a row. The German economy suffered a setback towards the end of 2012, data out today showed. The Federal Statistical Office (Destatis) stated that the German GDP decreased by 0.6% in the fourth quarter of 2012 compared with the previous quarter.
Meanwhile, the financial market conditions in the EU have improved substantially since last summer. But economic activity has been disappointing in the second half of last year. However, leading indicators suggest that GDP in the EU is now bottoming out and economic activity is expected to gradually accelerate, noted the European Commission (EC) in its first winter economic forecast for the euro area and the European Union as a whole
The pick-up in growth will initially be driven by increasing external demand. Domestic investment and consumption are projected to recover later in the year, and by 2014 domestic demand is expected to take over as the main driver of strengthening GDP growth. The weakness of economic activity towards the end of 2012 implies a low starting point for the current year. Combined with a more gradual return of growth than earlier expected, this leads to a projection of low annual GDP growth in 2013 of 0.1% in the EU and a contraction of 0.3% in the euro area.
The yellow metal has dropped nearly 150 dollars from its late January highs and the current spate of selling has been triggered by worries on US monetary policy as well as technical factors. The metal is facing the “death cross”- a peculiarity in technical charts, which entails the 200-day Exponential Moving Average (EMA) falling under the 50 day EMA. While the futures market participants remain nervous on this count, there is a possibility that the domestic spot market buyers would lap up the metal as the spot prices linger around their seven-month lows. MCX Gold futures faced a resistance at Rs 29800 per 10 grams today and eased. The counter trades at Rs 29588, down Rs 154 per 10 grams on the day.
Source by Commodity Insights
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