Gold firmed in early deals of on Monday after jewellers resurfaced at lower levels. The metal is also supported due to concerns the US economy's recovery was losing momentum following the release of poor economic growth data.
Investment demand has surged much though. The world's largest gold-backed exchange-traded fund, SPDR Gold Trust, reported that holdings were unchanged at 1,282.279 tonnes, having dropped more than 18 tonnes in late July. The holdings hit a record at 1,320.436 tonnes on June 29.
On the DGCX, it’s now quoting at 1184 (Oct 2010 contract) and Dec 10 is now quoting 1185.30.
Australian dollar rose on Monday taking cues from the rising stocks and the broad based slide in the US dollar. The dollar index, which measures the US dollar’s value against a basket of currencies, hit a three-month low of 81.402 dipping below support near 81.44, which is roughly a 50 per cent retracement of its November to June rally.
AUD is now quoting at 90.50 (Sep month contract) on the DGCX. Currencies like AUD seem to be benefiting from the risk appetite rises and general rise in economic optimism.
Recent UK data surprises and US$ weakness has been propelling UK’s sterling higher. Any dips from the current rally is likely to be well supported after it made a key technical break earlier in the week above its 200-day moving average.
Established market poll on showed that severe UK budget cuts and the possibility of slower growth ahead will force the Bank of England to wait until the second quarter of 2011 to raise interest rates from their current record low of 0.5 per cent.
Indian rupee strengthened to its highest level in more than a month in the early transactions on Monday as banks sold dollars on the back of early gains in local shares, with stronger regional currencies also boosting sentiment.
Investors would continue to watch the local stock market moves for cues on foreign fund flows which are a key determinant of the rupee's fortunes.
So far this year, foreigners have bought a net $10.3 billion worth of local shares adding to last year's record $17.5bn inflow when the rupee had risen 4.7 per cent on the year.
On the DGCX Aug 10 is quoting at 215.45 (469.41) and Sep 10 contract is quoting at 214.48 (46.62).
Oil rose towards 12-week highs above $79 on Monday, driven by investor appetite for commodities and energy risk, with macroeconomic indicators in top consumers the US and China showing slower but sustained growth.
Data from the Commodity Futures Trading Commission reveal that money managers increased bets that prices would rise, or the so-called net long crude oil positions, to the highest level since May on the New York Mercantile Exchange in the week to July 27.
A tropical cyclone forming in the mid-Atlantic also lent support to oil prices as the hurricane season enters what in recent years has been a period of peak activity between August and early October.
The US National Hurricane Center (NHC) said late on Sunday that a tropical depression may be forming in the mid-Atlantic, assigning 80 per cent likelihood that the system may become a tropical cyclone within the next 48 hours.
On the DGCX, Aug 10 is quoting at 79.16 and Sep 10 contract is quoting at 79.56.
- The author is Senior Relationship Manager, Richcomm Global Services DMCC