Gold Up After A Drop

Gold futures inched up after dropping below $1380 levels yesterday weighed down by strength in the US dollar, on rally in equities and on cut in gold price forecast by Bank of America Merrill Lynch.
Gold for August delivery is trading up $7.9 at $ 1386.8 an ounce on the Comex division of the New York Mercantile Exchange. It shed $7.80, or 0.6%, to settle at $1,379.70 an ounce. It traded as low as $1,372.80 but also briefly topped $1,400 during the session.
Tuesday marked the expiration for June gold options, likely contributing to volatility in the market. Floor trading was closed for Monday’s U.S. Memorial Day holiday.
Gold prices last week climbed about 1.6%, the best weekly performance since the week ended April 26, on the heels of weaker global equities and a decline in the dollar. Still, gold futures have fallen more than 6% this month.
Gold prices settled lower Tuesday as the U.S. dollar rose against key rivals, including the Japanese yen. Dollar-denominated gold and other commodities usually move lower when the dollar rises as it makes them more expensive for holders of other currencies to buy.
Bank of America Merrill Lynch also cut its 2013 forecast on gold by 12% to $1,478 an ounce. The analysts said “higher growth, rising nominal yields and subdued inflationary pressure have all limited investor buying.”
A rally in stocks in Europe and Asia on Tuesday, and sharp gains on Wall Street contributed further pressure on gold, luring investors away from the precious metal.
Data Tuesday helped to draw more attention away from gold. The U.S. consumer-confidence index climbed to a five-year high of 76.2 in May from an upwardly revised 69.0 in April, the Conference Board said Tuesday. Separate data showed that U.S. home-price growth was the fastest in nearly 7 years, with the S&P/Case-Shiller 20-city composite up 1.4%.
MCX June gold futures may open today’s session near Rs 26480 levels with resistance near Rs 26590 levels and support near Rs 26400 levels.