Thursday, 19 March 2015

Demand Worries Cap Gold After Latest Jump

Gold dropped from its highs today as demand worries ensured that the metal does notextend a smart rally in the last session. The COMEX Gold futures jumped along withequities last night. The FOMC statement removed the word “patient” regardingwhen to decide to raise interest rates. However, the statement also pointed out someweaker US economic data recently, indicating that the Fed may not be able to raiseinterest rates as soon as it would have liked. The COMEX gold futures had dropped under$1150 per ounce to mark another four month low.
A strong wave of buying lifted the metal from these levels though the counter failed tohold on above $1170 per ounce mark today. The COMEX Gold futures are quoting at $1160 perounce, still up $9 per ounce on the day though the intraday moves have seen the metal dropby more than 10 dollars. MCX Gold futures are trading at Rs 25816 per 10 grams on the day,up Rs 179 per 10 grams or around 0.70% on the day. The counter rose to an intraday highnear Rs 25950 per 10 grams mark earlier.
Gold soared Wednesday after the Federal Open Market Committee indicated a slower paceof rate hikes, following the removal of the word “patient” from its policystatement. Stocks also jumped with the Dow surging 1.3%, to close at 18,076.19, aftertrading down 100 points just before the statement’s release. Productivity in the USeconomy has been disappointingly low, Yellen noted. The bright side is that lowproductivity means more workers are needed to produce the output demanded, she stated. Sheexpects productivity to pick up in the medium term though.
However, demand worries continue to haunt gold and speculative buying is taking abackseat. Gold speculators and large futures traders continued to decrease their goldbullish bets last week for a sixth consecutive week and brought the overall bullish levelto its lowest point since November, according to the latest Commitment of Traders (COT)data released by the Commodity Futures Trading Commission (CFTC) on Friday. Thenon-commercial futures contracts of Comex gold futures, traded by large speculators andhedge funds, totaled a net position of 81,892 contracts in the data reported through March10th. This was a weekly change of -33,928 contracts from the previous week’s total of115,820 net contracts that was registered on March 3rd.

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