Gold Gives Up Yet Again, MCX Futures Under Rs 28k

MUMBAI-INDIA (Aug 5)  Gold slipped under Rs 28000 per 10 grams in the evening trades as prices succumbed to persistent selling pressure in the world markets. World equities remained supportive amid supportive economic data from China and Eurozone and gold pulled lower from intraday highs near $1320 per ounce. Prices had recovered after the US non-farm payrolls but gave up bulk of these gains today. The COMEX Gold futures are trading at $1305.30, down $5.20 per ounce on the day. 

The release of US employment data last week resulted in fears of the US central bank reducing its $85 billion monthly bond buy back plan, causing gold prices to rally. The US Federal Reserve stated in the middle of the week that the information received since the Federal Open Market Committee met in June suggests that economic activity expanded at a modest pace during the first half of the year. Labor market conditions have shown further improvement in recent months, on balance, but the unemployment rate remains elevated.

Today, the HSBC China Services Business Activity Index printed at 51.3 for the second month in a row, above the 50 mark signalling growth though at a level HSBC called historically weak. HSBC chief China economist Hongbin Qu said following the data release that the service sector has stabilized at a relatively low level of growth. The strength in services index has come on top of the last week's improved manufacturing index and could support metal counters in the near term. 

In Europe, Eurozone final purchasing managers' indexes for July, were released today. The composite index for the euro zone rose to 50.5, above a preliminary reading of 50.4 and better than June's 48.7. The July reading marked the first time since January 2012 the index has climbed above the 50 level that separates expansion from contraction

India's gold demand has remained moderate over last few weeks after a spike in April when prices slumped towards Rs 25000 per 10 grams in the major local markets. World Gold Council, is upbeat about the demand for jewellery picking up momentum in the coming quarters in the country and even projected demand for gold touching 865-965 tonnes in 2013, thus exceeding 2012's record.

MCX Gold futures for October are trading at Rs 27987, down Rs 60 per 10 grams on the day