Comex Gold Prices rose to the highest level in 11 months on Thursday. Gold Prices are now within easy striking distance of the 2012 high just above $1,800.00. Gold Prices were supported by high Gold Trading Volumes & also by sharply rising Crude Oil prices, as tensions in the Middle East are heating up. Gold Bullion held in Gold ETF holdings, exchange-traded products expanded 11.14 metric tons, or 0.4%, to a record 2,565.472 tons as of yesterday, according to data tracked by Bloomberg. Gold Prices traded near the highest level in almost 11 months on speculation that central-bank stimulus from the U.S. to Europe and Japan will boost demand for the metal as a store of value.
Fresh violence in Syria this week and rising tensions between Iran and Turkey pushed Crude Oil & Gold Prices up. Reports said Iranian and Turkish troops were mobilizing near their shared border. As expected, huge short coverings and bargain hunting buying were seen in Crude Oil and oil regained nearly all of Wednesday’s big losses. Tensions in the Middle East are simmering and will soon boil over. There was also protesting in Iran this week due to the severe devaluation of the Iranian currency recently. These developments did prompt some fresh safe-haven Gold demand pushing Gold Prices further. Upcoming Global events currently are supportive for Gold Prices. Also the strongest seasonal portion of the year for physical Gold Demand is just ahead which has the most significant influence on Gold Prices. All eyes in the Gold Trading market will be on Friday’s key monthly U.S. employment report. With the Fed now focusing more intensely on U.S. employment data, a poor result would sufficiently re-energize the Gold market’s attempts to push Gold Prices higher. The market consensus for non-farm payrolls growth is of around 115,000. A higher than expectation number may weaken Gold Prices but traders can expect dips in Gold Prices to be eagerly bought and for any journey down south to be ultimately very short-lived. If Gold Prices see a decline today, on the last trading day of the week, the same may be bought up by Chinese traders entering markets after a week long national holiday. The big money flow into Gold is still waiting for China to wake up & act as when China does so, Gold Prices will flare up sharply.
At Thursday’s monthly European Central Bank press conference, ECB president Mario Draghi reiterated the ECB is prepared to sop up the excess debt following treasury auctions of stressed European Union countries. He also pledged full ECB support for the Euro currency. Draghi’s comments boosted the Euro currency, which in turn helped to support Gold Prices. ECB kept its interest rates unchanged & the Bank of England too left its interest rates unchanged, as expected. ECB President Mario Draghi said everything was in place for the bank to buy the bonds of troubled euro zone countries such as Spain and that conditions linked to such purchases need not be punitive. Draghi’s going to make sure that the market doesn’t fall apart. That is positive news for Gold Prices coming from the Eurozone. Draghi’s stimulus-friendly comments fueled gains in equities and commodities, led by a near 4% rebound in Brent Crude Oil futures. ECB said it was ready to buy bonds to help the bloc’s debt-laden nations, boosting bullion’s appeal as a hedge against inflation, raising Gold Prices in return. The number of Americans filing new claims for unemployment benefits rose only slightly last week after a big drop the week before, a hopeful sign the job market is still on the mend. The data came a day before the closely-watched monthly non-farm payrolls data.
Some Analysts attributed Thursday’s broad market rally to the notion that U.S. Republican presidential nominee Mitt Romney has put his campaign on a more positive footing following an aggressive debate performance against President Barack Obama Wednesday night. Traders are now waiting for critical jobs data from the United States for indications on whether its latest stimulus measures are having the desired effect on the labor market.
Asian stocks gained, led by commodity producers, and regional currencies rose for a seventh week, the longest winning streak since October 2010. The Euro rose to $1.3032 / US$ yesterday & has started Friday’s trading session on a solid footing, having rallied to two-week highs after the European Central Bank said it was ready to buy bonds of troubled euro zone members and that conditions to trigger the program need not be punitive. A rising Euro against the US Dollar leads to rises in Gold Prices. The Bank of Japan has today kept its stimulus programs and key rate unchanged. The yen gained to 78.34 per dollar and 102 per euro after the BOJ kept its asset purchase fund at 55 trillion yen ($700 billion) and maintained its credit loan program at 25 trillion yen, while keeping the key overnight rate at 0 to 0.1%. The currency touched 78.72 yesterday, the weakest since Sept. 19.
A firming Indian Rupee is positive & encouraging for Gold demand for the world’s largest consumer of Gold. Rupee strength has helped Indian Gold demand of late and volume numbers yesterday surged to the highest seen since early April. The US Dollar has dipped against the INR – Indian Rupee from 57.30/$ on June 22 to 51.45/$ today Oct 5, levels seen earlier on April 17 2012. Technically the US Dollar is in over sold condition against the INR for a short term & can bounce up to 53.29, a strong resistance now. If this level is breached with strong momentum, only then will the US Dollar rise further to 55.09, or else resume its south bound journey, which is more likely. In the meantime, Gold Prices in Indian markets which have hugely corrected to Rs. 31,063 by around Rs. 1,720 from the lifetime high of Rs. 32,783 for MCX Gold December Futures seen in September after the Fed’s QE3 announcement may bounce up on a retracement in the INR. MCX Gold Prices have sharply slumped in India, in the same time frame when Comex Gold Prices have been on the up move, on the back of an appreciating Rupee.
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