Gold Showing Signs Of Weariness After Recent Gains

MCX Gold futures continued to retreat in intraday moves, mimicking moves in the last session. COMEX Gold flipped back from highs near $1380 per ounce. Global prices continued to face resistance as the Fed looked set to trim its asset purchases by the year-end. Local prices have turned up this week as the Indian Rupee fell above 65 per US dollar and pushed up the metal on the local bourses. COMEX Gold is hovering at $1372.60 per ounce- up around two dollars on the after. Prices have hit two-month high levels earlier in the week. MCX Gold quotes at Rs 31115, down Rs 25 per 10 grams or 0.80% on the day.

The Conference Board Leading Economic Index (LEI) for the US increased 0.6 percent in July to 96.0 (2004 = 100) yesterday, following no change in June, and a 0.3 percent increase in May. Meanwhile, the number of US workers seeking new unemployment benefits rose last week but remained near five-year lows, an indication of an improving labor market. Also Thursday, financial data firm Markit reported that a preliminary PMI (purchasing managers' index) index of factory activity rose in August to 53.9, its best showing since March. A reading above 50 indicates expansion.

The keenly awaited minutes of the last US Fed meet revealed earlier in the week that ''a few'' members of the Federal Open Market Committee (FOMC) ''suggested that it might soon be time to slow somewhat the pace'' of asset purchases, the minutes said. But the timing of the Fed's plan to taper its stimulus program remained unclear, as others in the group ''emphasized the importance of being patient''. They said more data gauging growth in the economy was needed before reducing the $US85 billion-a-month bond-buying program.

Fed officials also discussed the rise in interest rates following the June FOMC meeting. Some participants indicated that overall financial-market conditions had tightened significantly. They also expressed concern that the higher level of longer-term interest rates could be a significant factor holding back spending and economic growth.

The exports of gold jewellery from India dropped 70% in July due to non-availability of the raw material, while silver jewellery shipments more than doubled in the same period, the Gems and Jewellery Export Promotion Council (GJEPC) said. Shipments of gold jewellery fell to $441.4 million in July from the $1.5 billion in the year ago period, the total gems and jewellery exports fell 17 percent to $2.49 billion, the GJEPC noted. Gold imports into India are expected to re-start by next week after the central bank clarified a new rule that brought the flow of the precious metal into the world's top gold consumer to a standstill at the end of July.

Gold Steady But Dollar May Weigh

Gold futures are trading steady above $1375 an ounce in the Asia electronic session today, however the metal may face a resistance as the dollar strengthened.
Gold for December delivery is trading up $5.70 to $1,376.5 an ounce, extending its yesterday’s gains on the New York Mercantile Exchange. Earlier, today it jumped to as high as $1379 an ounce.
Yesterday, the gold prices rose to the highest levels of the day after the U.S. Department of Labor said the number of individuals filing for initial jobless rose by 13,000 to a seasonally adjusted 336,000 last week. Jobless claims for the preceding week were revised up to a gain of 323,000, from a previously reported 320,000.
The minutes of the central bank’s July meeting showed that Fed officials were "broadly comfortable" with plans to scale back the bank’s USD85 billion-a-month stimulus program. However, policymakers remain divided over the timing of possible reduction, with almost all committee members agreeing that a change in the asset purchase program was not yet appropriate.
The minutes described recent U.S. economic data as “mixed”, indicating that plans to taper could be pushed back if the economy was to weaken. The central bank is scheduled to meet September 17-18 to review the economy and assess policy.
The Kansas City Federal Reserve hosts an annual meeting of central bankers at Jackson Hole, Wyo., which is due to kick off Friday. While Fed Chairman Ben Bernanke won’t be attending, markets will watch the proceeding for any further clues to the policy outlook.
MCX October gold futures may open today’s session near Rs 31220 levels with resistance near Rs 31300 levels. Yesterday, it closed down nearly 1 % at Rs 31140 per 10 grams.

MCX Gold Reverses Direction, Global Prices Not Moving Much

MCX Gold flipped back in the afternoon after recording heavy gains. The Indian Rupee fell above 65 per US dollar and pushed up the metal on the local bourses. However, global prices continued to face resistance as the Fed looked set to trim its asset purchases by the year-end. COMEX Gold is hovering at $1370 per ounce- unchanged on the day after hitting its two-month high levels earlier in the week. MCX Gold quotes at Rs 31352, down Rs 92 per 10 grams or 0.30% on the day.

The keenly awaited minutes of the last US Fed meet revealed yesterday that ''a few'' members of the Federal Open Market Committee (FOMC) ''suggested that it might soon be time to slow somewhat the pace'' of asset purchases, the minutes said. But the timing of the Fed's plan to taper its stimulus program remained unclear, as others in the group ''emphasized the importance of being patient''. They said more data gauging growth in the economy was needed before reducing the $US85 billion-a-month bond-buying program.

Fed officials also discussed the rise in interest rates following the June FOMC meeting. Some participants indicated that overall financial-market conditions had tightened significantly. They also expressed concern that the higher level of longer-term interest rates could be a significant factor holding back spending and economic growth.

The exports of gold jewellery from India dropped 70% in July due to non-availability of the raw material, while silver jewellery shipments more than doubled in the same period, the Gems and Jewellery Export Promotion Council (GJEPC) said. Shipments of gold jewellery fell to $441.4 million in July from the $1.5 billion in the year ago period, the total gems and jewellery exports fell 17 percent to $2.49 billion, the GJEPC noted. Gold imports into India are expected to re-start by next week after the central bank clarified a new rule that brought the flow of the precious metal into the world's top gold consumer to a standstill at the end of July.

Gold Fragile Ahead Of FOMC

Losses in gold deepened with the US dollar trading higher and sharp drop in the crude oil prices. Fed policy is the center of attention, with the U.S. central bank's Federal Open Market Committee meeting minutes due later today.
European stock markets traded mixed in early action on Wednesday, with investors closely awaiting the minutes from the latest U.S. Federal Reserve meeting, which could shed more light on the potential reduction of asset purchases. France's CAC 40 index rose 0.3% to 4,041.93, while Germany's DAX 30 index was slightly lower at 8,297.30. The U.K.'s FTSE 100 index lost 0.3% to 6,434.87.
Comex gold for December delivery lost $8.9 to $1,363.7 an ounce on the New York Mercantile Exchange. Yesterday, it ended higher by $6.90, or 0.5%, to settle at $1,372.60 an ounce.
September silver futures extended yesterday's losses, breaking below $23 an ounce. Yesterday, it fell 9.5 cents, or 0.4%, to end at $23.07 an ounce, extending Monday's 16-cent decline.
The downward drift came as the dollar edged higher, with the ICE dollar index rising to 80.937 from 80.901 late Tuesday in North America. The minutes, due to be released at 2 p.m. U.S. Eastern time Wednesday, are expected to provide clues as to when the central bank will begin rolling back its stimulus.
However, the Indian gold futures are up due to stark weakness in the Indian Rupee. The October gold futures are trading up Rs 18 at Rs 30830 per 10 grams. The metal should face a resistance near Rs 39990 levels.
The Indian rupee opened lower at 63.44 per dollar versus 63.25 yesterday. Dollar weakened to trade sub 81 levels. The euro-dollar sees a smart upmove to a 6-month high of 1.34 levels.
The Reserve Bank has announced another set of measures to rescue the rupee, bonds, and bank stocks. The RBI said that it will purchase Rs 8,000 crore worth of bonds via open market operations on Thursday. It added that it will calibrate its purchases in the future, when needed.

Gold Off Two-Month Highs Ahead Of Fed Minutes

MCX Gold futures are on a firm foot today, aided by a dismal undertone in Indian Rupee even as the global prices moderated. The COMEX Gold futures tested lows near $1360 per ounce as investors waited for the FOMC minutes to be released in evening. However, bargain buying supported the commodity as investors eyed good demand from India and China. The metal is quoting at $1365.90, down $6.70 per ounce on the day. Prices had hit a two-month high of $1384 per ounce on Monday.

China may overtake India as the world's biggest gold consumer in 2013 as the dragon country has more favourable policy on the precious metal as compared to the economy here, the WGC said last week. Gold consumption in China rose to 570 tonnes in the first half of the current calendar year, slightly higher than 566.5 tonnes in India, the data showed. Consumers in these two countries expect gold prices to be stable or higher in the future, it said.

According to the latest WGC report, the gold consumption in China during the April-June period of this year confirms that the gold investment demand in China remains strong. The poorly performing stock market in that country is not an attractive alternative investment and gold investment products are increasingly available and easily accessible to a captive domestic audience. In China, continued expansion of the domestic jewellery retail network and growth in production capacity has positive longer-term implications for jewellery demand.

Indian Rupee fell near 64.60 per US dollar levels as the local stock markets witnessed a massive intraday sell off and dropped nearly 2% on a closing basis to end at an 11 month low. MCX Gold futures are trading at Rs 31209, up Rs 397 or 1.29% on the day with 4.30% increase in the open interest. Prices had dropped near Rs 30600 per 10 grams earlier.