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Tuesday, March 03, 2009

Gold slides further as selling pressure stays on

COMEX Gold linger around crucial 920 mark ahead of barrage of data

Gold futures eased further today, after holding on yesterday night as panic stricken investors dumped the yellow metal just like the other assets and made the yesterday's gains in the electronic session very much a momentary aberration in the downward spiral the metal has been experiencing since hitting $1000 mark a few days back.

The dollar strength continued unabated. US dollar broke below 1.2600 levels against the Euro once again today as the traders eyed weak data releases from Euro zone while continued risk aversion in the global markets also supported the broad sentiments in the US currency. The dollar has been in a great tough off late and a today's rebound from early lows may be an indication that the three-month highs of 1.2538 are likely to be tested soon in the pair.

In economic news, French Finance Minister Christine Lagarde expected France's economy to contract 1.5% this year. Such a contraction would suggest that France was currently suffering from the worst recession since the Second World War. The decline in overall economic activity also indicated that the country would most likely exceed budget deficit forecasts.

COMEX Gold slumped to a low of $921.50 an ounce and currently trades at $925.30, down $14.70 from the previous close. The commodity is currently hovering around a very crucial support and the narrow $900-920 corridor may see the mettle of the bulls tested heavily as the last few days selling pressure continued to take its toll on. The movement is likely to turn volatile ahead of US Fed's Bernanke testimony and US Pending Home Sales. Late in the session, ECB Chairman Trichet's Speech would also pitch it with its share of instability.

MCX Gold futures for April hit a low of Rs 15305 and edged up marginally as the weakness sin the Indian rupee pushed the counter up. The contract was lingering at Rs 15417 per 10 grams, down nearly Rs 400 from the previous close.

source: Capital Market
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