GOLD CHOPPY AS EUROPE STARTS HIGHER (Apr 11)

GOLD CHOPPY AS EUROPE STARTS HIGHER

Date: 11/04/2012

Gold futures are showing choppy moves today as the European markets stared higher while the Asian equity markets traded sharply down tracking the losses in US on back of surge in European borrowing costs which reignited concerns about exposure to the debt-stricken region.

Earlier in the day the metal tumbled, but recovered the losses ahead of Europe opening. June gold futures are down $1 at $ 1659 per ounce in electronic trades. The counter needs to break above $1670-90 levels for direction. Depreciation in dollar also lift gold higher today.

European stock markets rose slightly on Wednesday, following sharp losses the prior day driven by declines in by Spanish and Italian stocks. The German DAX 30 index rose 0.7% to 6,651.51, while the French CAC 40 index rose 0.1% to 3,222.71. The FTSE 100 index was flat at 5,598.37.

The industrial production in Spain fell 5.1% in February on an annual basis, the national statistics office reported on Wednesday. That compares to a 4.3% fall, revised down from 4.2%, in January. On a monthly basis, industrial production fell 3% against a 2.5% drop in January. The data come as Spain is in the spotlight over deficit and economic worries.

Yields for Spain's 10-year government bond were steady on Wednesday at 5.94%, but a day prior jumped 19 basis points, edging closer to the closely watched 6% level. The dollar edged lower against major rivals on Wednesday, as investors took some comfort from positive signals for the upcoming U.S earnings season. The ICE dollar index, which measures the greenback against a basket of six currencies, traded at 79.83, just down from 79.875 reached in late North American trading on Tuesday.

MCX benchmark gold futures surged to high of Rs 28643 and low of Rs 28541. A fall below Rs 28540 may take it towards Rs 28410 levels.

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