Gold tumbled heavily yesterday, testing its lowest levels in six weeks amid a mega sell off in US stock markets as investors fear a widening European debt crisis as new doubts emerge over the Greek debt swap. Gold stumbled well under $1700 per ounce mark yesterday and a breach of 100 Day Exponential Moving Average hurt the sentiments severely for the metal. The most actively traded contract, for April delivery, fell $31.80, or 1.9%, to settle at $1,672.10 a troy ounce on the Comex division of the New York Mercantile Exchange.
This was the first time the contract settled below $1,700 since Jan. 24, marking a six-week settlement low for gold. Waning inflationary worries also troubled gold as data showing the annual rate of inflation across developed economies slowed in January for the second straight month.
The Organization for Economic Cooperation and Development said that consumer prices in its 34 member countries rose just 2.8% in the 12 months to January, down from an increase of 2.9% in the year to December. January's annual inflation rate was the lowest since March 2011. The commodity is quoting slightly higher in Asia today as bargain hunting helps though the pressure on broad markets suggests that the upside could be limited. The commodity quotes at $1678, up $5.90 per ounce on the day.
MCX Gold futures closed at Rs 27847, down Rs 101 per 10 grams on the day after testing a low of Rs 27750 per 10 grams. The counter witnessed less damage compared to global prices given the weak undertone in Indian Rupee. Rupee tested lows past 50 per US dollar mark yesterday. We could expect MCX futures to move in a range of Rs 27800-28000 per 10 grams today and a break under Rs 27800 could lead to more losses.