Gold futures were hit by stronger dollar which rose on reports of positive economic data from the U.S. These data signaled that recovery in the U.S. is strengthening.
Industrial production rose at 0.4% while Empire Manufacturing Index also improved. Positive data came along with lower inflation (CPI up by only 0.10% in November against 0.2% prior), which further hurt gold’s inflation hedge demand. Moreover, Moody also signaled to lower Spain’s credit rating which boosted the dollar.
Key Observations
Gold futures for February-delivery fell 1.3% to close down at $1386.20/oz yesterday.
Positive data releases from the U.S. and fears that Spain’s credit rating may be downgraded stoked dollar’s demand. The dollar gained more than 1% to close up at 80.229 levels against six major currencies.
Equities were lower yesterday as Eurozone debt concerns resurfaced after Moody signaled to lower the credit rating of Spain. On the other hand, U.S. economic data came positive, but overshadowed by debt concerns. The benchmark MSCI World Index for stocks closed down by 0.63%.
SPDR gold holdings were little changed at 1286.19 MT.
MCX gold futures were supported by weaker rupee which slid 1% to 45.3975/USD. Gold for February delivery settled merely 0.20% lower at `20631/10 gm yesterday.
