To begin with, United States, Europe, Japan and many other countries remained shut on account of New Year’s Day and hence markets were calm and serene market with volatility to its minimum.
Whatever fluctuation came in was mainly due to two reasons:
In the international market it was the data released from the US and in the domestic market it was the weakening rupee against the dollar.
Gold prices were also supported as weaker than expected economic data from United State likely to spurt safe haven demand for the yellow metal . Data released from the US was as follows-
- On Thursday, government data showed that the number ofmAmericans filing new claims for unemployment benefits rose sharply last week, a potential signal the job market was losing steam
- Initial claims for state unemployment benefits rose 20,000 to aSeasonally adjusted 287,000 for the week ended Dec 26.
- US Chicago Purchasing Managers Index in December month fell to 42.9 compared to analysts’ expectation of 49.8 and 48.7 a month ago, government data showed on Thursday.
- SPDR Gold Trust holdings dropped by 0.18% i.e. 1.19 tons to 642.37 tons on Thursday compared to 643.56 tons in previous trading day.
- After the SPDR Gold Trust reported outflows on Thursday, the harp gain in yellow metals was subdued as this outflow created a weak investment sentiment for gold on the market.
Gold prices fluctuated on Friday after the Indian rupee weakened against the dollar and on Exchange Trade Funds (ETFs) outflow, indicating subdued investment demand. Prices of the bullion were supported after the Indian rupee weakened against the dollar, denting prospects of higher imports. At 1:40PM dollar/rupee traded at Rs 66.21/$1 compared to previous close of Rs 66.15/$1.
Gold prices were also supported as weaker than expected economic data from United State likely to spurt safe haven demand for the yellow metals.
Prices of the precious metal were also supported by thin trading volumes as financial markets in United States, Europe, Japan and many other countries are shut on account of New Year’s Day.
In short, Gold prices were supported by weak local currency while subdued investment demand capped the gain.
Now as we welcome 2016 with a bang we hope it has lots in store for the global economies and for the yellow metal precisely.