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Friday, October 30, 2009

Gold Tumbles; Looks In For A Correction

US personal inc, Chicago PMI, consumer confidence data scheduled for release 


Gold futures tumbled in the mid day London dollar reversed its course and the equities in Europe traded on a weak note. Oil was also pulled lower below $ 80 a barrel mark. 

The U.S. stock futures also pointed to a weaker start Friday following the rally in the prior session on surprisingly strong economic growth in the third quarter. S&P 500 futures fell 4.4 points to 1,057.20 and Nasdaq 100 futures fell 3.5 points to 1,704.00. Futures on the Dow Jones Industrial Average dropped 35 points.

In the currencies the US dollar approached the 1.4700 Euro mark again after falling to as low as 1.4858 Euro. However it was weaker against the Japanese Yen giving gold mixed signal as a appreciating dollar against the Euro is giving it a negative signal but however a falling dollar against the Yen is lending support to it as a safe asset. 

Further momentum for the metal will depend on flurry of US data releases and movement in market. Friday's calendar has plenty of items of note as well, with personal income for September, Chicago PMI for October and the final reading of the University of Michigan's consumer confidence for October.

The December COMEX Gold futures contract was unable to break above the $1050 mark, the level, which we had mentioned in the morning update, has been intact. It fell more than $6 from those levels today and a further downward spiral can be expected on break of $1043 towards 1039, 1032 & 1020 levels. 

MCX bullion also slipped in red quoting at Rs 15827 down more than Rs 10 per 10 grams. A break of Rs 15914 levels may take it to 15880 & 15800 levels today. 

Recently the domestic gold futures are seen trapped between the volatile movements in the Rupee. The MCX December contract traded in the range of merely Rs 200 to Rs 16014-15810 due to ups and downs in the Indian currency, which is directly affected by the Indian equity market and US dollars movement in the international markets. 

Whereas the international bullion futures traded in the range of $30 so far this week which should have actually shown around Rs 500 movement in the Indian gold futures. But due to volatile swings in the Indian Rupee the Indian gold under performed.
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