Last week precious metals edged down. But this week the Euro and the dollar played a different game for gold.
ECB President’s statement about doing “whatever it takes” to preserve the Euro had resulted in a rise in the Euro for a second consecutive day which in turn gave support to gold. Gold rose by 0.44% to $1,619.8; Silver edged down by 0.07% and reached $27.45. During July, gold increased by 0.44% while silver slipped by 0.6%.
Most major commodities also rose during Wednesday’s trading: crude oil prices including WTI and Brent oil traded up; gold and silver prices didn’t do much as gold increased while silver edged down
Apart from the recovery of the Euro, gold got a mid weak support from the Fed news that came up. The potential from more liquidity and easing measures by the FED led to this rise.
Gold futures pared gains in the US on Thursday after a larger-than-expected drop in US unemployment claims slightly dampened the market's expectations for additional quantitative easing (QE3) from the Federal Reserve. US Labor Department reported that unemployment claims last week fell to a 353,000, down from a revised 388,000 the previous week. This marks the sharpest week-on-week decline since February 2011.
Gold surged to another new 3-week high, probing above the 100-day moving average (1615.12) for the first time since April. Moreover, the weaker dollar too lent support to gold. A softer dollar tends to underpin all commodities by making them cheaper in other currencies, plus some market participants tend to buy gold as a hedge against dollar weakness.
Gold prices strengthened further at the domestic bullion market on Thursday amidst good jewellery buying also influenced by higher global trend. Onset of the festive season saw increase in demand for gold in the Indian market.
Markets in general seem once again to have latched on to the notion that central bank actions are the only viable catalyst to take them higher. They rise and fall as expectations of further easing wax and wane. The better than expected US data make it less likely that the Fed will act, so markets retreat.
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