Gold Holds Around $1230 Ahead Of Weekend

Gold Holds Around $1230 Ahead Of Weekend

MCX Gold futures witnessed a strong surge in the early moves today as the global pricesrecovered in Asian trades. The latest figures from World Council (WGC) indicated yesterdaythat the gold demand around the world picked up in Q4 2014 though overall interest inphysical gold remained muted following a massive slide in Jewellery demand.

 The metal haswitnessed a recovery after testing its one month low this week and currently trades at$1230.10 per ounce, up $9.40 per ounce on the day. MCX Gold futures are trading at Rs26687 per 10 grams up Rs 168 per 10 grams on the day.

Asian markets are mostly up today following supportive overnight cues. US stocks jumpedThursday, sending the S&P 500 to its highest close this year and within shoutingdistance of the record close reached on December 29th 2014. 

Stocks managed to surgedespite a lackluster retail sales reading as traders eyed reports of a cease-fireagreement between Russia and Ukraine and possibilities of more monetary easing from majorglobal central banks.

Meanwhile, the global gold market ended 2014 on a strong footing, according to a latestupdate from the World Gold Council (WGC). Q4 demand grew from 930.0t to 987.5t (+6%).However, the annual total of 3,923.7t was down 4% year-on-year – not surprising asconsumer demand in 2014 was never likely to match 2013’s record surge says the WGC.

Jewellery demand was down 10% to 2,152.9t, but 5% above its five-year average. Investmentrose 2% to 904.6t, although bar and coin fell from the 2013 record. Central banks bought477.2t, close to a 50-year high.

Continued substitution pushed technology to an 11-year low of 389t. Total supply wasflat: mine production was a record 3,114.4t while recycling fell to a seven-year low asprices plummeted to lowest in half a decade. According to the WGC, year-on-yearcomparisons for the last few quarters have been coloured by the singular strength injewellery, bar and coin demand in 2013. Total supply for 2014 at 4,278.2t was littlechanged; an increase in mine supply was balanced by a further decline in recyclingvolumes.

Indian demand for gold jewellery rose by 8% to 662 tonnes in 2014 - making it the bestyear of jewellery demand since records began in 1995, the WGC stated in its latest golddemand trends update. Overall gold demand stood at 842.7 tonnes in 2014, of which goldjewellery demand alone was 662.1 tonnes, according to the WGC. The fourth quarter growthwas concentrated in October (Diwali) and November (wedding season), before the sudden andunexpected removal of import restrictions at the end of the month threw the market intodisarray, it said.

However, total demand for gold in India fell by 14% in 2014 led by a sharp contractionin investment demand, which fell in response to restrictions on gold imports, which werein place most of the year. The country’s gold demand for 2014 stood at 842.7 tonnescompared with 974.8 tonnes in 2013. Total investment demand fell by 50% to 180.6 tonnes.

Continued selling pressure was witnessed in gold last week as the metal failed to holdonto its modest rallies. Massive strength in the US dollar and continued global economicworries hurt the metal despite signs that speculative buying is emerging at the lowerlevels. The yellow metal has been on a downward trajectory after hitting its five monthhighs above $1300 per ounce in the third week of January 2015. The counter witnessed amassive slide after the US nonfarm payrolls turned in a strong performance and witnessed adrop of around $30 in a single session.