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Monday, March 16, 2009

Risk appetite in equities pulls Gold lower

Yellow metal slips despite surge in Euro

Gold eased today, falling on improved risk appetite in the global equities market as traders tried to take profits after the recent strong of gains. The Yellow metal eased despite the surge in Euro, indicating that the near term direction is likely to take cues primarily from the equity markets and risk aversion levels.

Euro rose to a five month high against the US dollar today, extending the recent array of gains as the currency markets were stirred by the constantly rising risk appetite in the global equity markets and as traders eyed the near term data pointers.

The single currency rose to a high of 1.3046 against the US dollar, hitting its best levels in nearly five week despite a poor employment data. Employment in the euro zone fell by 0.3% in the fourth quarter of last year, having fallen by 0.1% in the third quarter, according to data released by the European Union statistics agency Eurostat Monday.

For the whole of 2008, employment grew by 0.8% from 2007, meaning that 1.137 million additional people were in work.

The single currency has been boosted off late due to a smashing rebound in the global equities last week, when Dow recorded its single largest intraday gain in nearly 60 years. The Asian as well as European markets spurted for a fifth consecutive session today, rejoicing on continued buying in financials and resources as market grew further convinced about the current rally extending in the new week.

However, the yellow metal was supported on a strong physical demand from the ETFs and losses were limited as such. COMEX Gold futures for April slipped to a low of $921.90 per ounce and currently trade at $925.50, down $4.60 per ounce.

MCX Gold futures for April rebounded from a low of Rs 15208 per 10 grams and currently trades at Rs 12221, down Rs 94 or 0.61% from the previous close. The open interest in the counter was more or less static today.

source: Capital Market
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