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Thursday, November 26, 2009

Gold Takes A Breather After Rising Near $1200 Threshold

International gold futures fell after hitting a records high of $1195 earlier today as the dollar rebounded from its lows, but the market was still expected to seek higher ground due to prospects for central bank buying and further dollar weakness. 

Trading will be thin on Thursday because markets in the U.S. are closed for the Thanksgiving holiday.

Bullion has gained more than 37% this year -- including a 13% rise in November alone on dollar weakness, expectations of further reserve diversification by central banks and fears of inflation next year.

The dollar recovered some poise after hitting a 14-year low against the yen as traders betting against the U.S. currency cashed in on its recent slide. Against a basket of currencies, the U.S. currency was up by 0.37%.

U.S. December Gold dropped $3.30 to $1,183.70 an ounce in electronic trading on the COMEX division of the New York Mercantile Exchange.. Earlier it rose to a fresh high of $1,195.00 per ounce

Gold gained 1.8% on Wednesday following reports that central banks were in the market to buy bullion. The Financial Chronicle newspaper reported that India's central bank may buy the 201.3 tons of gold the IMF is selling on terms now being negotiated. Also, the IMF sold a total 20 metric tons of gold to the Central Bank of Sri Lanka for $375 million.

MCX Gold futures are however trading higher today as the weakness in Indian Rupee supported the counter. The December gold futures are trading up almost Rs 90 at Rs 17803 per 10 grams. A fall below Rs 17745 levels will be bearish for the metal today.
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