Gold Climbs On Physical Demand As Speculators Remain Sidelined

Mcx Gold Tips

                         Gold is starting off this week much different than last Monday, when it began its historic plunge after Chinese GDP data missed their mark. This morning gold has regained 25.95 to trade at 1421.55, well under the 1520 price range a week ago. Golddropped its most in 30 years between Monday and Wednesday last week declining almost 200.00 to trade in the upper 1300 range.

Gold is climbing more on pent up physical buying as lower prices come as buyers had remained away from the markets due to the high price. The demand is also generated during the year-end for the festivals like ‘Akshya Tritiya’ and ‘Diwali’. Gold coins and jewelry as selling at historic levels, with the mint running out of inventory. Investors though remain out of the markets. The slump in bullion had come at a time when the Indian markets were witnessing a higher demand for the ongoing marriage season. Gold is bought during festivals and marriages, with the main festival season starting from August to October.

Gold in world markets had slumped the most since 1983 on April 15, by losing nearly 10 per cent on speculations that Cyprus might lead other European countries in selling the metal from reserves to revive the economy.

The precious metal jumped more than 1% on Monday after a rebound above $1,400 ignited technical buying, but sentiment was shaky as steady outflows from exchange-traded funds trimmed holdings to their lowest in three years. The technical outlook for gold, which has plunged more than 15% so far this year, is yet to improve although the safe-haven asset could find support from a rush in physical buying in Asia and other parts of the world.

Gold has failed to react to tension in the Korean peninsula, with its safe-haven appeal dented by expectations the US Federal Reserve will soon end its bullion-friendly bond buying programme, which could ease inflationary pressure.

The precious metal had rallied to an 11-month high in October last year after the Fed announced its third round of aggressive economic stimulus, raising fears the central bank’s money-printing to buy assets would stoke inflation.

Outflows on exchange-traded funds could also indicate that investors were parking their money elsewhere, although last week’s trading data from the Unites States showed that funds had injected new money to gold futures. Gold holdings of SPDR gold trust, the largest  ETF backed by the precious metal, declined to 1,123.06 tons, as on April 19.Silver holdings of ishares silver trust, the largest ETF backed by the metal, declined to 10,451.01 tons, as on April 15. Silver is following cues from gold this morning to add almost 50 cents trading at 23.455. Courtesy : FxEmpire