Gold dropped heavily today as a correction from its two week highs
continued. The metalis easing on ideas that support for Swiss referendum
to require the country’s centralbank to hold 20% of its reserves in
gold bullions is waning. Gold fell towards $1130 perounce at the start
of the month, testing its lowest level in four and half years
amidpersistent dollar strength and demand worries for the yellow metal.
The metal currentlytrades at $1183.90 per ounce, down $10 per ounce on
the day. MCX Gold futures are tradingat Rs 26493 per 10 grams, down Rs
218 per 10 grams or 0.82% on the day.
However, weak undertone in
Indian rupee could offer some support for the local futures.The Indian
rupee edged lower at commencement tracking losses in the Asian
currenciesmarket. The domestic currency trades at 62.12 per US dollar,
its weakest mark in eightmonths. The US dollar is holding just above
1.2500 mark against the Euro in globalmarkets- off its four year high
but still in a formidable position.
The minutes of the US Federal
Reserve's last policy meeting released Wednesday showedthat the Fed
decided not to alter its wording on the timing of any interest
rateincreases. Fed officials worried that a change could be
misinterpreted by financialmarkets. Most economists predict that the Fed
won't raise rates before June. The US stocksedged up a bit after the
minutes. In last week of October, the Fed voted to end its assetpurchase
program, by a 9-1 vote, and repeated that rates are likely to stay near
zero for“a considerable time,” adding further that the first move to
raise rates couldcome sooner if the economy is stronger than expected.
Meanwhile,
India’s gold imports jumped in last month amid falling prices
andexcellent demand ahead of the peak festive season. Gold imports rose
280% to $4.17 billionfrom $1.09 billion in the year-ago period. However,
India’s merchandise exportscontracted in October, the first time this
fiscal year exerting pressure on thecountry’s trade deficit. The trade
deficit widened to $13.3 billion in October from$10.6 billion a year
ago, according to data released by the commerce ministry on
Monday.During the month, merchandise exports contracted 5% to $26
billion. Imports grew 3.6% to$39 billion, with the growth moderation
mainly on account of lower petroleum imports.
Global Gold demand
totalled 929 tonnes in the third quarter this year, which proved tobe a
generally subdued quarter for the gold market, according to the World
Gold Council'sGold Demand Trends. This was the lowest level for gold
demand in nearly five years. Demandfell by around 2% compared to third
quarter of last year. Jewellery demand softened by 4%year-on-year, but
the comparison continues to be heavily influenced by the events in 2013.
The
metal witnessed a solid jump on 14th November as short covering pushed
up theprices ahead of weekend. COMEX Gold futures soared sharply, adding
more than 2% in asingle session to close at $1185 per ounce. The Swiss
National Bank could be forced to buynearly $60 billion of gold at
current spot prices after the first poll on the impendingSwiss
referendum shows a ‘yes' vote. On November 30, voters in Switzerland
willdecide whether or not to outlaw further gold sales from the Swiss
National Bank, to makephysical bullion at least 20 percent of the bank's
assets and whether to repatriateSwiss-owned gold.
