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Wednesday, February 25, 2009

Gold rebounds from days low

Yellow metal rises on ideas recent selling overdone

Gold found a support around $950 an ounce mark after witnessing a feverish spell of profit sales earlier in the day. The commodity continued to ease for a second day as the retreat from $1000+ levels extended amid a favorable scenario for the global equities. The COMEX gold futures for April hit a low of $952.20 per ounce before traders begin to enter long.

The metal dipped despite a weakness in the US dollar, as, for the first time in the last few days, the momentum seemed to be turning bearish for the yellow metal. Traders questioned the sustainability of the $1000+ levels from the point of view of the retail investment demand, which is set to take a hit amid a worldwide recession and negative wealth effects from the global equities and other asst market turmoil.

However, the dollar pared most of its losses. The currency has risen in the last few hours against the Pound and the Euro, the bad UK GDP data looks too heavy for the European currencies, the GBP/USD has fallen more than pips and the EUR/USD also fell by nearly 100 pips in the European session.

COMEX Gold, however, went up on ideas recent selling was overdone and currently trades at $958.50, down $11 per ounce from the previous close. The counter fell $25.5 or 2.6% to close at $969.1 an ounce on the New York Mercantile Exchange yesterday, coming off nearly one-year highs.

MCX Gold futures plummeted to a low of Rs 15210 before rebounding. The April MCX futures currently trade at Rs 15340, down Rs 144 or 0.93% from the previous close.

source: Capital Market
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