Gold update

Gold has jumped in Asian trades today as equities soared and Euro tumbled to its lowest level in nearly one year. The metal had dropped in New York floor trades on Friday, testing lows near $1650 per ounce but has flipped back thereafter. The stocks in Shanghai and Hong Kong are leading the charge in Asia and all commodities are in a positive mood. The COMEX Gold futures are trading at $1666.30, up $5.70 per ounce on the day after testing a high of $1667.90 earlier in the session. 

Gold continued to encounter heavy resistances in last few days, plummeting to a four month low on worries over demand from emerging nations and fears that the Fed would be on the lookout to pause its relentless quantitative easing. The metal has started the year on a bright note, hitting near a two week high of $1700 per ounce level but failed to break the watershed mark and was sold on rallies thereafter as investors grew worried about the metal getting back to its winning ways in near term. 

The Indian demand is expected to remain lax in near term as the festive season is over and a weak rupee is ensuring that the prices are hovering around Rs 31000 per 10 gram mark in spot markets- up about 11% over the year. India's Minister P Chidambaram noted that the country's record current account deficit is worrying indicated that the government has no choice but to try and curb gold imports to correct the heavy deficit. Recent data shows that current account deficit surged to 5.4% of gross domestic product (GDP) in the September quarter, driven by falling exports. The gap, the widest in absolute terms since 1949, has weakened the rupee currency and exposed the economy to costlier imports.

Meanwhile, the minutes from December policy meeting of US FOMC showed that several top officials expected to slow or stop the so-called quantitative easing program, dubbed QE3, well before the end of the year. This hurt gold quite severely as ultra easy money has been one of the primary factor boosting the Gold prices over last couple of years. The COMEX Gold futures have been constantly facing selling pressure after topping out at a high of $1800 in October last year. 

Euro has surged to a high of 1.3340 against the US dollar today, propping Gold and other commodities higher. Crude and copper are also trading with smart gains. MCX Gold futures for February are trading at Rs 30799, up just Rs 9 per 10 grams on the day as a strong Indian Rupee capped the upside. The INR is up by nearly 10 paise against the US dollar in opening moves.