Gold Eases To Two-Week Low

MCX Gold futures slipped in tune with the global prices as a broad retreat continued for the red metal amid a pullback in global stock markets. The metal had witnessed a sizeable fall in the last week, extending a drop from its highs around $1490 per ounce amid strength in US dollar and a continued outflow in major gold exchange trades funds. The metal fell to a two-week low of $1418 per ounce on Friday and remained depressed today. The benchmark COMEX futures slipped from highs near $1450 per ounce and currently trade at $1433.20, down $3.40 per ounce on the day.

Even as the prices have recovered in last few weeks, the declines in holdings in gold-backed exchange-traded funds remained a concern in the market. Gold holdings in the SPDR Gold Trust fell to 1051.65 tons on Friday lingering around their four-year low.

The Asian markets witnessed a mixed set of data from China. The industrial production in the country witnessed a smaller-than-expected rise in April, underlining worries that the economy may be losing steam. Output rose 9.3% from a year ago, which was up from March's figure of 8.9% but below market forecasts for a 9.5% rise. Fixed-asset investment also weakened in the first four months of 2013. However, the Chinese retail sales increased in line with expectations by an annualised 12.8% in April, up on the 12.6% rate witnessed in the previous month.

Meanwhile, India's trade deficit in April soared more than 70% from March as imports of gold and silver shot up over two times. The deficit widened to $17.8 billion from $10.31 billion in March. Imports in April rose 10.9% from a year earlier to $41.95 billion. That was mainly because of a sharp increase in the imports of gold and silver — India imported $7.5 billion worth of gold and silver in the past month, compared with $3.1 billion in the year-earlier period.

This is concurring with the fact that demand in the country after a ferocious drop in mid April has held very well. However, this data failed to prop up the prices must on Akshay Tritiya- considered a very good occasion to buy the yellow metal in India. The benchmark MCX Gold futures fell in a hurry, breaking under 26900 per 10 grams mark in early moves. The metal tanked to a low of Rs 26676 per 10 grams and edged up to trade at Rs 26772 per 10 grams right now, down Rs 227 or 0.84% on the day with a massive 17% increase in the open interest.