Yellow metal has witnessed correction in prices off late due to Global Risk Aversion phenomenon but medium term outlook still remains inclined towards consolidation…
Gold, a commodity, which was considered to be a hedge against inflation, dwindled in the last ten days elevating worries and surprises to those who treated it as a thumb rule. The prices depleted by as much as 2% in the futures market on MCX. Investors across the globe became risk averse in Gold, meaning thereby that they preferred options that generated less interest but were safer bets, most prominent being treasuries and bonds.
Gold, a commodity, which was considered to be a hedge against inflation, dwindled in the last ten days elevating worries and surprises to those who treated it as a thumb rule. The prices depleted by as much as 2% in the futures market on MCX. Investors across the globe became risk averse in Gold, meaning thereby that they preferred options that generated less interest but were safer bets, most prominent being treasuries and bonds.
U.S. Commerce Department report on Friday showed that the country’s economy grew by 3.4% in the second quarter, removing some of the concerns about economic growth in sympathy with Wall Street's plunge, which lead to liquidation in positions of precious metals especially Gold.
The market participants however have already discounted the above-mentioned factors so going forward an upward thrust in prices is highly probable. Medium term outlook is quite supportive, with factors like Greenback skirmishness against the other majors (i.e. EURO, Yen, and our very own Rupee) and Crude journey to its yearly highs on NYMEX.
The foremost aspect is the weakness in Dollar, the currency has been under pressure on account of slag in US economy due to Sub prime mortgage jitters and housing sector slumps. EURO has so far consolidated its position by 2% against the greenback in a months period, while Rupee has been hovering around 40 mark. The position of Dollar against these currencies is likely to remain nervy in days to come.
Light Sweet Crude Oil September delivery settled at $77.02 per barrel 27th July 2007, on technical buying and news of faster-than-expected economic growth in the United States. The highest-ever settlement price for a front-month contract was $77.03 a barrel, set July 14, 2006. Last July, NYMEX crude hit an all-time intraday trading high of $78.40 a barrel.
Investors are looking forward to a series of reports released in the coming days, which should paint a clearer picture of the future of economic growth. The series of reports begins with the release of a report on personal income and outlays. Personal income is the total dollar value of income received from all sources by individual, ISM manufacturing survey report, the survey is conducted by the Institute for Supply Management, and encompasses nearly 400 manufacturing firms on all aspects of employment, production, new orders, supplier deliveries, and inventories. Other reports coming out next week include consumer confidence.
Going forward Yellow Metal looks to be touching a level of 690 an ounce on COMEX, which is its critical resistance, while in MCX the emergence of lower level value buying will lead Gold to taste 8900 per ounce levels.
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