Gold Rallies As Dollar Slips

Frankfurt (Dec 10)   Gold futures rallied more than $10 in the early Europe hours today helped by weakness in the US dollar and rise in crude oil futures. The yellow metal rallied despite the Fed officials giving an indication of start of QE tapering in December.

Gold for February delivery is up $10.7 to $1,244.90 an ounce on the Comex division of the New York Mercantile Exchange. Crude oil futures approached the $98 a barrel mark ahead of the weekly supplies and upbeat data releases from China.

Chinese retail sales in November climbed 13.7% from a year earlier, up from the 13.3% rise in October. But industrial output for November rose 10% from the year ago period, slower than October’s increase of 10.3%.

Also, urban fixed-asset investment grew an annualized 19.9% in the January-November period, slowing from a 20.1% rise for January-October. Fixed-asset investment is seen as an indicator of construction activity in China.

The ICE dollar index, which tracks the greenback against six major rivals, fell to 80.077 from 80.139 late Monday. Meanwhile, the dollar held above the 103 level against the Japanese yen after St. Louis Federal Reserve Bank President James Bullard said Monday that monetary policy makers may consider slightly reducing the pace of stimulus.

In separate remarks, Richmond Fed President Jeffrey Lacker said the issue will be discussed at next week’s meeting. Also Richard Fisher the president of the Dallas Federal Reserve Bank said, the Federal Reserve should begin to pull back the pace of its asset purchase program "at the earliest opportunity," The central bank is scheduled to meet December 17-18 to review the economy and assess policy.

MCX February gold futures rallied above Rs 29300 trading up more than Rs 200 per 10 grams. The counter may face a resistance near Rs 29500 with support around Rs 29100 levels.