Gold On MCX Settled Up 0.5% At 29088

Gold on MCX settled up 0.5% at 29088 in response to disappointing U.S. non-farm payrolls data that lowered expectations for more aggressive U.S. interest rate increases. Prices also seen supported boosted by demand for safe-haven assets due to political tensions in the United States and Europe. Data showed that U.S. job growth slowed in May and employment gains in the prior two months were not as strong as previously reported, suggesting the labour market was losing momentum.

U.S. factory activity ticked up in May after slowing for two straight months and private employers stepped up hiring, suggesting the economy is regaining speed and making interest more likely. Gold was sold at a discount to official prices in India for the first time in one-and-a-half months ahead of a new national sales tax regime that takes effect on July 1, while higher prices kept buyers on the sidelines elsewhere in Asia. Demand remained tepid in India, the world's second largest consumer, with dealers offering a discount of up to $1 an ounce to official domestic prices. In top consumer China, a festive holiday in the beginning of the week limited the possibility of any new purchases.

Premiums were seen at $7 an ounce in China and 60 cents to $1 an ounce in Hong Kong, both unchanged from the previous week. Federal funds futures implied traders saw a 96 percent chance of the U.S. central bank increasing key overnight borrowing costs by a quarter-point to 1.00-1.25 percent at its June 13-14 policy meeting, CME Group's FedWatch program showed. Technically now Gold is getting support at 28881 and below same could see a test of 28674 level, And resistance is now likely to be seen at 29216, a move above could see prices testing 29344.

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Suhani Verma

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