MCX Gold witnesses modest correction after latest gains

MCX Gold futures slipped slightly in the early moves, giving up after a massive rally in the Friday's session.

Gold futures got a boost on the disappointing jobs data, which put to rest recent sentiments that the Federal Reserve may consider tightening policy in the coming months.

The U.S. Bureau of Labor Statistics reported earlier the economy added 88,000 nonfarm payrolls in March, way below expectations for a gain of 200,000 and below the 268,000 jobs added in February.

The metal edged up at a ferocious pace following this, adding nearly 30 dollars in intraday moves.

The counter currently quotes at $1576.90, up $1 per ounce on the day.

The US non farm data revealed that the private sector added 95,000 jobs last month, after an increase of 254,000 in February, missing expectations for a 209,000 rise.

The report also showed that the U.S. unemployment rate ticked down to 7.6 per cent in March, from 7.7 per cent the previous month, as more Americans left the labor force.

The news sent the dollar falling and gold rising on expectations for the Federal Reserve to keep monetary stimulus programs in place, including its USD85 billion monthly bond-buying program that weakens the greenback as a side effect.

The June COMEX gold futures had tumbled to 10 month low of $1539.4 earlier this week, however it jumped back to end the fortnight at $1575.9 an ounce.

It rallied to a one-month peak in March on worries about fiscal stability in Europe, as politicians scrambled to clinch a bail-out for Cyprus.

Fear that central banks' money-printing to buy assets will stoke inflation has been a key driver in boosting gold, which rallied to an 11-month high in October after the Fed announced its third round of aggressive economic stimulus.

The international gold prices are down nearly $80 from its last year's level as the US dollar has appreciated.

The June COMEX gold futures are trading at $ 1575.9 an ounce as on 5th April 2013 whereas last year the metal has been trading near $1650 an ounce levels.

The US dollar has gained nearly 2 per cent in April 2013 compared to the same period last year.

There could be some upside resistance for the yellow metal after the massive array of gains seen on Friday.

The US dollar is quoting just under 1.3000 levels against the Euro, coming off its two-week low levels.

MCX Gold futures slipped as the Rs 29800 barrier yet again triggered a correction.

The counter quotes at Rs 29707, down Rs 60 per 10 grams on the day with 1 per cent drop in the open interest.

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The MCX Silver futures broke above Rs 61000 per kg levels today as a good amount of fresh buying helped the metal amid mostly positive movement in global risky assets. The US dollar slipped as US Congressional leaders met with President Barack Obama on Friday and said they would work to find common ground on taxes and spending. This boosted hopes that the world's largest economy would be successfully able to combat with the looming "fiscal cliff". Gains in other industrial commodities like Copper and Crude oil also boosted the metal. COMEX Silver futures are trading at $32.60, up 2.3 cents or 0.73% on the day.

Silver futures extended a downward run from its highs near $35 per ounce achieved in the first week of October 2012. LME Copper tested its two-month lows and kept Silver in tight ranges. Silver is linked directly to industrial activity and safe haven demand and a drop in copper is normally supposed to have a negative influence on the white metal. The commodity tested its two-month lows near $30 per ounce and closed at $32.37, up nearly 5% on the fortnight. The prices have been locked in a broad range of $30-35 per ounce over last few days and a break on the either side is needed for further direction.

Precious metals consultancy GFMS estimates that industrial demand for silver fell 6% in 2012, driven by weak economic growth in developed countries. Manufacturers continued to find ways to substitute cheaper raw materials in place of silver. Meanwhile, consumers have cut purchases of silverware and shifted away from costly precious metals in their jewelry purchases. The trend was partially offset by rising sales in emerging markets, particularly China, GFMS said. While the industrial demand dropped, silver mine supply rose for the 10th consecutive year in 2012, and is expected to total 797.0 million ounces, up 4.3% from 763.8 million ounces in 2011, according to the consultancy.

The white metal had neared $32.30 per ounce levels earlier in the session but edged up quite impressively thereafter, adding one full dollar during the day. The Asian equities added good gains following a near 1.5% surge in Japanese stocks while the European stocks are also up by nearly 1%. MCX Silver futures are trading at Rs 61038, up Rs 168 or 0.26% on the day. The open interest in the counter is up nearly 4% - indicating fresh buying.

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IT major Infosys rose ahead of its Q2 September 2012 earnings tomorrow, 12 October 2012. Realty major DLF rose on bargain hunting after recent steep slide. Unitech galloped over 17% on massive volumes after the realty major said it has reached an agreement with Telenor to amicably settle all disputes with Telenor. Bank stocks edged higher in volatile trade. Suzlon Energy dropped on high volume as the company failed to get a four-month extension of the maturity dates of the two series of Foreign Convertible Currency Bonds (FCCBs) due in October 2012.

FMCG stocks rose on favourable outlook for Rabi or winter crop following wide-spread rains in August and September, with FMCG giant Hindustan Lever hitting record high. Tata Global Beverages scaled record high. Capital goods pivotals were in demand. Metal stocks edged higher as metal prices rose on the London Metal Exchange.

Key benchmark indices reversed initial gains on weak Asian stocks. The share market Sensex alternately swung between positive and negative zone in morning trade. Key benchmark indices hovered in red in mid-morning trade as weakness in Asian shares dampened investor sentiment. Key benchmark indices remained in negative zone in early afternoon trade. The Sensex reversed intraday losses in afternoon trade as European stocks edged higher in early trade there. The market surged in mid-afternoon trade. The market extended gains in late trade.

Provisional data showing that foreign institutional investors (FIIs) remained buyers of Indian stocks on Wednesday, 10 October 2012, boosted sentiment. Foreign institutional investors (FIIs) bought shares worth a net Rs 407.60 crore on Wednesday, 10 October 2012, as per provisional data from the stock exchanges.

As per provisional closing, the BSE Sensex was up 198.97 points or 1.07% to 18,830.07. The index jumped 216.71 points at the day's high of 18,847.81 in late trade, its highest level since 9 October 2012. The index lost 49.61 points at the day's low of 18,581.49 in morning trade, its lowest level since 27 September 2012.

The S&P CNX Nifty was up 55.90 points or 0.99% to 5,708.05. The index hit a high of 5,721.10 in intraday trade, its highest level since 9 October 2012. The index hit a low of 5,636.95 in intraday trade, its lowest level since 5 October 2012.

The market breadth, indicating the overall health of the share market, was positive. On BSE, 1,693 shares rose and 1,202 shares fell. A total of 139 shares were unchanged.

The total turnover on BSE amounted to Rs 2463 crore, higher than Rs 2054 crore on Wednesday, 10 October 2012.

From the 30-share Sensex pack, 26 stocks rose while only four of them fell.

Index heavyweight Reliance Industries (RIL) rose 0.53% to Rs 820.50. The scrip hit a high of Rs 821.80 and low of Rs 809.05 so far during the day. RIL last week signed a 15 year heavy crude oil supply contract and a memorandum of understanding with Venezuelan state-run oil company Petroleos de Venezuela SA (PDVSA) for further development of Venezuelan heavy oil fields. PDVSA will supply between 300,000 to 400,000 barrels per day of Venezuelan heavy crude oil to RIL's two refineries in Jamnagar under a 15 year crude oil supply contract. As per the MoU with PDVSA, RIL is to explore upstream options for joint participation in heavy oil projects of the Orinoco Oil Belt. RIL will also co-operate with Petroleos by providing technical assistance in areas of offshore upstream, refining and other downstream projects.

Meanwhile, RIL has purchased 3.9 crore shares and spent Rs 2794.73 crore (excluding brokerage, service tax, Securities Transaction Tax, Stamp Duty, Exchange Transaction Charges and Sebi fees) till 18 September 2012 under the company's ongoing share buyback program. RIL has set maximum buyback price of Rs 870 per share. The company has set aside Rs 10440 crore for share buyback. The buyback program opened on 1 February 2012 and closes on 19 January 2013. RIL chairman Mukesh Ambani said at the company's Annual General Meeting in June 2012 that the company's buyback program represents a highly accretive use of cash by the company and it will supplement earnings growth from operations, for higher EPS (earnings per share), in the near future.

FMCG stocks rose on favourable outlook for Rabi or winter crop following wide-spread rains in August and September. FMCG firms derive substantial revenue from rural India. Winter crops will gain from high soil moisture and brimming water reservoirs.

India's largest FMCG company by sales Hindustan Unilever (HUL) rose 0.7% to Rs 568.25. The stock hit record high of Rs 571.50 in intraday trade today, 11 October 2012.

Tata Global Beverages rose 2.47% to Rs 160 after striking a record high of Rs 161.25 in intraday trade today, 11 October 2012. Tata Starbucks -- an equal joint venture between Tata Global Beverages and Starbucks Coffee Company -- on 27 September 2012 confirmed that the first store in India will open in Mumbai by the end of October 2012. The store will also be the first Starbucks location to feature espresso sourced and roasted locally from India through the coffee sourcing and roasting agreement with Tata Coffee, Tata Global Beverages said at that time. Tata Starbucks will own and operate Starbucks cafés in India.