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Thursday, March 12, 2009

Gold manages to hold above $900

Yellow metal extends recent turnarounds on weak equities, strength in oil

Gold held up to its recent turnaround but the sentiments remained jittery after the prices drifted below $900 per ounce mark yesterday. Traders are quite uncertain about the direction I the yellow metal after its failure to break convincingly above $1000 mark and hit all time highs a few weeks back, when scales seemed widely tipped inn favor of the yellow metal.

However, the commodity witnessed some buying support around $900 an ounce level today on weakness in equities and strength in crude oil. The global equities turned lower today as yesterday's rally fails to live another day as the optimism spurred by the sharp turnaround in US equities earlier in the week fizzled out. Crude also rallied after yesterday's setback. Nymex crude oil futures rebounded after yesterday's fall to trade up $1.13 to $43.46 a barrel on Globex. Futures fell $3.38 or 7.4% in New York yesterday as the U.S. government reported stockpiles of crude and distillate fuels swelled last week.

On the economic front today, Japanese economy contracted slightly less than initially reported in the fourth quarter, with GDP down 3.2% from the previous quarter, or down 12.1% in annualized terms. The original estimates were a 3.3% on-quarter decline and annualized 12.7% contraction. Japan's Nikkei 225 finished down 2.4% after Wednesday's 4.6% surge.

Most Asian markets ended lower today. Hong Kong's Hang Seng Index ended up 0.6% at 12,001.53, Malaysian shares were 1.4% lower, Philippine shares eased 1.1% and Indonesia's main index declined 0.5%. Japan's Nikkei 225 finished down 2.4%, Taiwan's Taiex slipped 0.1% and Australia's S&P/ASX 200 slipped 0.3%. New Zealand's NZX 50 fell 0.2%. European shares gave back some of this week's gains with banks and commodity stocks under a bit of selling pressure as investors continue to fret about the economic backdrop.

COMEX Gold futures trade at $914.90, up $4.20 per ounce from the previous close, after hitting a high of $918.20 per ounce. The counter has rebounded from a low of $ 906.30 an ounce earlier in the Asian trades as falling equities spurred buying interest.

MCX Gold futures for April are trading at Rs 15172, up Rs 55 per 10 grams or 0.36% from the previous close. The contract is finding some buying above Rs 15000 levels and further strength is seen building up in intraday moves if the counter breaks above Rs 15200 levels. The open interest is up 1.12% so far.
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