Gold Tops $1400, Gains In Dollar Could Trim Upside

MCX Gold futures witnessed a recovery from intraday lows yet again as retail buyers poured in the major cities in India, particularly in Mumbai. Asian and European markets eked out small gains and COMEX Gold was also seen adding to its bounce from two and half year lows. The metal managed to test highs above $1400 per ounce and currently trades at $1388.80, up $6.10 per ounce on the day.

Extraordinarily loose monetary policy risks sparking credit bubbles, which threaten to tip the world back into financial crisis, the International Monetary Fund warned yesterday. In its global financial stability report, the fund cautioned that further policy reforms were needed urgently to restore long-term health to the financial system before the long-term dangers of monetary stimulus materialised.

The IMF noted that the global financial crisis could morph into a more chronic phase, marked by a deterioration of financial conditions and recurring bouts of financial instability. In the short term, however, the fund is more upbeat. José Vinals, IMF head of financial stability, noted that spring has arrived to global financial markets where after very rainy days and threatening clouds, we are beginning to see some blue skies and more sunny days.

Meanwhile, US data showed that the business among manufacturers in the Philadelphia region softened slightly in April, the Philadelphia Federal Reserve said Thursday. The bank's business-conditions index edged down to 1.3 from 2.0 in March, though any reading above zero indicates that manufacturers are still expanding. The Fed reported that the index for new orders fell to negative 1.0 in April from 0.5 in March.

The US dollar is quoting just above 1.3000 levels against the Euro, holding onto its latest gains and could trim intraday gains for the yellow metal. MCX Gold futures fell near its recent low yet again buy swing back. Prices are quoting at Rs 25616, down Rs 63 per 10 grams or 0.25% on the day or with 3.54% increase in the open interest. Spot rates in Mumbai are around Rs 26300, excluding VAT and local taxes and with not much of a fall emerging over last two days, cash buying is picking up.

Gold Recovers Near $1400 After Blood Bath

MCX Gold futures are up around 1.50% on the day after a freakish slide ended in global markets and some buying finally emerged. The COMEX Gold prices recovered from a two and half year low of $1321.50 per ounce in Asian trades. Equities were mixed throughout the day today on the back of a torrid collapse in US stocks. Traders seemed to have gotten adjusted to the frantic moves in last few sessions and Gold was seen picking up strength in response to its traditional friend - a weak US dollar. COMEX Gold is up nearly $80 per ounce in intraday moves and quotes at $1394.90, up $35.20 per ounce on the day.

In a key development in global markets, the leading global futures exchange- CME said it will raise the collateral requirements for trading in benchmark gold, silver and other precious metals futures contracts, effective at the close of business Tuesday. The exchange also said it also will increase margins to trade its benchmark natural-gas futures, also effective Tuesday. Margins to trade benchmark Comex 100-troy ounce gold futures will be increased by 19%, CME said in a notice emailed late Monday. The margin to trade silver will increase 18%.

Gold was hammered heavily for a second session yesterday as a massive sell off was triggered once the metal broke under $1500 per ounce levels. The counter lost nearly $140 per ounce on the day- its biggest slide in nearly three decades. US stocks also dropped like a rock after Chinese economic data came in weaker than expected. The country's GDP for the January-March quarter rose 7.7% from a year earlier, weakening from 7.9% growth in the fourth quarter. Industrial production for March increased 8.9% from the year-earlier period, the weakest in more than a year and slowing from a 9.9% average rise for the January-February period.

Locally, panic struck the retail markets when the prices fell under Rs 26000 per 10 grams- its lowest level in nearly two years. Macro data also showed that India's headline inflation slowed to the lowest rate in more than three years in March, spurring expectations that the Reserve Banks of India will cut policy interest rates next month to help the economy recover from its slowest growth in a decade. Wholesale prices, country's key inflation measure, eased to 5.96% in March aft, the lowest rate since November 2011.

The media reports revealed yesterday that India's gold imports have fallen nearly 24 percent in the first quarter of the current year. It will be interesting to see if the local gold traders and bullion merchants buy the commodity in bulk after the recent meltdown. MCX Gold is up today after falling as low as Rs 25270 per 10 grams. This marked a drop of around Rs 5000 over last one month. Some buying picked up thereafter and the metal is now quoting at Rs 25999, up Rs 365 per 10 grams or 1.42% with 1.21% increase. Some minute buying is emerging in the counter.

Gold Bear Run Starts

Stretching into the third session of losses, the yellow metal seems to end its 12 year long bull run with the panic selling taking it down by as much as $179 an ounce in late trade on Monday to a fresh 27-month low.
Today, as well it opened down, trading at $ 1347 per ounce on the COMEX division of New York Mercantile Exchange. The gold price is down more than 18.7% this year and Friday's sharp decline dragged the metal it into official bear territory, defined as a 20% decline from a high.
U.S. stock indexes fell the most in five months Monday, swept up in a rush out of gold, oil and other commodities, after reports from China showed the industrial giant's growth had cooled. The Dow Jones Industrial Average ended near its lows of the day, down 265.86 points, or 1.8%, to 14,599.20. The S&P 500 index sank 36.49 points, or 2.3%, to 1,552.36. The Nasdaq Composite fell 78.46 points, or 2.4%, to 3,216.49.
Soured sentiment built as the session wore on, exacerbated by a drop in a gauge of U.S. home builders' confidence. Some strategists said the pullback was expected after stock indexes notched records last week.
CME Group Inc. said it will raise the collateral requirements for trading in benchmark gold, silver and other precious metals futures contracts, effective at the close of business Tuesday.
Margins to trade benchmark Comex 100-troy ounce gold futures will be increased by 19%, CME said in a notice emailed late Monday. The margin to trade silver will increase 18%, palladium will increase 14% and platinum will increase 19%. Natural-gas futures will increase 5.6%
Futures exchanges like CME keep tabs on market volatility as they determine how much collateral, or margin, traders must deposit to back up trades. When markets like gold begin to rapidly swing, exchanges may decide that customers need a bigger cushion to cover changes to their positions.
Gold hit a record $1,909 an ounce intra-day on 23 August 2011, but a the next day suffered one of few triple digit one-day losses when it plummeted $105, ending the week down more than 10% from the all-time high.
For 10 years the price of gold shot up, aided especially by the stock market meltdown of 2009. After hitting its high in August 2011, gold saw a gradual decline as the stock market rose into record territory. Then it plummeted 25% last week, indicating growing global economic weaknesses.
MCX June gold futures may open today's session near Rs 25400 levels with support around Rs 25100 levels.

Gold Flat As Fed Minutes Loom

Gold futures are trading flat in the Asia electronic session today as the Fed meeting minutes of March 20 meeting loom.

Gold for June delivery are trading flat at $ 1586.7 an ounce on the Comex division of the New York Mercantile Exchange. Yesterday, it gained $14.20, or 0.9%, to settle at $1,586.70 an ounce.

It erased Monday’s 0.2% loss and prices marked their highest settlement since the first day of the month, when they closed above $1,600.

The dollar also slipped against the Australian dollar on Tuesday after Chinese consumer inflation data for March came in below expectations. The Aussie is sensitive to Chinese economic indicators as China is Australia’s largest trading partner.

On the data front today, China swung to a trade deficit of $880 million in March, the General Administration of Customs reported Wednesday, as imports surged 14.1% from a year earlier. The deficit followed February's $15.2 billion surplus. The gain in imports fell more than 15% in February. Exports rose 10% from March 2012.

For the week ahead, gold investors will be looking for minutes due Wednesday from the U.S. Federal Reserve's meeting on March 20, at which monetary policy makers decided to continue with its program of buying $85 billion a month in assets.

MCX June gold futures may open today’s session near Rs 29600 levels with resistance near Rs 29650 and support near Rs 29550-500 levels.

Gold Up Marginally On Japan Easing

Gold futures are trading marginally higher in the Asia electronic session getting support from the recent monetary easing in Japan which took Yen to 4 year lows.

Japan’s currency fell Tuesday, struggling at four-year lows against the U.S. dollar as it extended its dive in the wake of fresh Japanese monetary stimulus. The U.S. dollar bought 99.40 yen in Asian trade, compared with ¥99.21 in North American trade late Monday.

As the greenback toyed with the ¥100 level, Japan’s Finance Minister Taro Aso hinted Tuesday that policy makers are unlikely to seek to slow the pace of the yen’s decline. Aso said the yen was correcting after a period of excessive strength.

The central bank last week said it would increase the amount of its longer-term holdings of Japanese government bonds from ¥89 trillion ($900 billion) at the end of December to ¥190 trillion in two years’ time. The euro also rose against the yen Tuesday, fetching ¥129.73, up from Monday’s level of ¥129.01 and nearing its own psychologically important handle of ¥130.

Gold for June delivery are trading up $2.2 at $ 1574.7 per ounce on the Comex division of the New York Mercantile Exchange. Yesterday, it fell $3.40, or 0.2%, to settle at $1,572.50 an ounce.

Gold futures fell on Monday, marking their fourth loss in five trading sessions, as a stronger dollar and continued outflows from exchange-traded funds helped fuel a pull back in the wake of a strong rally late last week.

Gold finished Friday’s session up $23.50, or 1.5%, at $1,575.90 an ounce after the U.S. Labor Department said the economy created 88,000 new jobs in March.

MCX June gold futures may open today’s session near Rs 29530 levels with resistance near Rs 29600-700 levels.