Gold Update - Gold Is in Reverse Gear on Thurday Trade

indore, December 31, 2015 (Newswire.com) - Commodity Updates - Gold futures ended lower in the domestic market on Wednesday as investors and speculators exited positions in the precious metal tracking weakness in the overseas market as continued strength in the US dollar curbed the lure for the precious metal as an alternative asset. Stronger greenback makes gold more expensive for those holding other currencies, thus dimming demand. Further, a renewed slump in oil prices raised fears over global deflationary pressures, dimming the appeal of the yellow metal, a hedge against inflation. Oil prices slid nearly 3 per cent on Wednesday as a surprise expansion in US crude oil stockpiles exacerbated fears over a global supply glut. Trading volumes were thin with most traders having already closed their books, ahead of the New Year. The losses in the precious metal were limited by speculation that the US Federal Reserve may raise interest rates at a gradual pace, supporting gold’s appeal as a store of value. A surprise drop in US pending home sales signaled a slowing housing recovery in the world’s biggest economy, bolstering the case for a measured pace of interest rate tightening. Gold may trade lower today amidst caution ahead of US jobless claims and Chicago PMI data which may offer further cues over the health of the US economy.

While US jobless claims likely stayed near a four-week low last week, a gauge of business activity in the US probably shrank at a weaker pace with the Chicago PMI tipped to rise to 49.8 in December from 48.7 in November, data may show today.

Further, trading volumes may remain thin ahead of the New Year.

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