GOLD JUMPS ON CHINA INFLATION; BARGAIN BUYING
Date: 09/04/2012
Gold futures jumped in the Asia trades today as traders bought commodity after it tumbled below $1715 levels last week following the Fed meeting minutes in which it dashed the hopes of third round of quantitative easing. The commodity also got a boost as the gold jewelers in India ended the strike on Friday after the nation's finance minister promised to consider getting rid of newly imposed taxes on the multi-billion-dollar industry.
China's consumer prices climbed at a faster-than-expected rate of 3.6% in March from the year-ago period, according to official data released Monday. Meanwhile, China's producer price index, a gauge of wholesale prices, fell 0.3% from a year earlier.
An ounce of gold on COMEX division of New York Mercantile Exchange is up $11 at $ 1641 in Asia electronic trades. COMEX Gold ended the month of March down 2.46%, but ended the quarter up 6.38%.
High level of risk aversion was seen in the financial markets recently with the downbeat PMI data from China and Europe, the lackluster Japan Tankan survey all washed away the gains in equities and the commodities. In last two weeks equity markets of Japan, US and UK tumbled by 3.2%, 1.3 and 3% respectively. While the US dollar surged by hefty 1.3% versus the single currency and gold, silver and oil tumbled by 2%, 1.3% and 3.3% respectively. COMEX Gold ended the month of March down 2.46%, but ended the quarter up 6.38%. Silver fell 6.23% on the month, but is up 16.18% on the quarter.
MCX June gold may start today's session above Rs 28200 with resistance 28260 levels. The prices may get an additional boost as the strike came to an end on Friday.
At a meeting in New Delhi on Friday, Finance Minster Pranab Mukherjee said the government would reconsider the doubling of import duties on gold to 4% from 2%, the imposition of an excise duty on unbranded jewelry and a tax on transactions above 200,000 rupees. The All India Gems and Jewellery Trade Federation called off the nationwide work stoppage estimated to have cost the industry at least 200 billion rupees, or $3.91 billion, since it began March 17.
The government's move had came in an effort to cut gold imports by the world's largest gold purchaser and reduce India's current account deficit.
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