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Thursday, April 16, 2009

Gold range bound; US data remains the key

Gold not able to breach $900 level so far this week

Gold futures had a range bound activity today with the firmness in the dollar and equities reducing the appeal for it and gains in oil supporting it.

In data releases today China said its economy expanded at a 6.1% clip in the first quarter, which was slower than the 6.8% expansion in the fourth quarter. In the euro zone, consumer prices grew at a record low of 0.6% in March while industrial production in February tumbled.

Benchmark NYMEX oil futures were trading up 16 cents at $ 49.41 per barrel. Oil continued to be in positive zone for the entire session despite solid strength in the US dollar. Declaration of force majeure by Royal Dutch Shell PLC's on its Bonny light crude oil shipments following a pipeline fire was lending good ground to oil.

In the currency movement today the US dollar gained very smartly against the British pound and the single currency. The greenback scored hefty 1% to 1.4845 versus the pound. It gained 0.5% vis a vis the Euro following the bleak industrial production and decelerating inflation levels.

COMEX Gold June 2009 contract had a limited activity of merely $5 till now. Same was last quoting at $ 891.9 down 1.7%. Gold futures were not able to breach the psychological $900 mark so far this week as the greenback registered solid gains vis a vis the single currency. So far this week oil has also registered loss thereby pressurizing gold further. U.S. data due for release today includes weekly jobless claims, March housing starts and the Philly Fed index for April. This will decide further course of gold in the US floor session.

Domestic Gold futures on MCX topped out from Rs 14300 per 10 grams, and are now trading at Rs 14261 down Rs 21. The counter was bearish for most of the session as was mentioned in the morning update today and the resistance at 14297 level also worked well. Now the US data remains the key and if the trend reverses the resistance will come around 14385-14425 levels.
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