Today the benchmark gold futures are trading down $6 at $ 1723 per ounce. Yesterday it ended the U.S. session solidly higher, after hitting a fresh seven-week high. The precious metals markets continued to feel the bullish effects of Wednesday's FOMC statement. Gold for February delivery ended higher by $26.6 or 1.6%, to end at $1,726.7 an ounce on the Comex division of the New York Mercantile Exchange on Thursday. Prices rose to a high of $1,731.5 during intra day trading. Last week, gold gained 2%. For the year 2011, gold rose 10%.
In the data releases so far today, the Japanese retail sales rose in December, snapping back from November losses, but large retailers reported a fifth month of lower revenue. Last month's overall retail sales rose 2.5% from a year earlier, the Ministry of Economy Trade and Industry reported Friday, while sales at large-scale retail stores slipped 0.4%. In November, overall sales fell 2.2%, while large retailers saw a 2.5% drop.
Also Japan's core consumer price index fell 0.1% in December from a year earlier, the Internal Affairs Ministry reported Friday. The drop was the third straight year-on-year fall for core CPI, raising the specter of a return to sustained deflation in Japan. The core CPI, which excludes volatile fresh-food prices, was flat compared to the November reading, while total CPI was also flat month-on-month and was down 0.2% year-on-year.
The precious metals markets continued to feel the bullish effects of Wednesday's FOMC statement from the U.S. Federal Reserve that suggested the Fed will continue its very accommodative monetary policy for quite some time to come, at least through 2014. The very low interest rate environment suggested by the Fed is bullish for gold and silver as it suggests other competing assets, such as bonds or even stocks, will continue to have low annual returns. It also hints the Fed remains very concerned about the U.S. economy's health, which is also bullish for safe-haven gold.
Yesterday, the Commerce Department said U.S. sales of new homes fell 2.2% in December to a seasonally adjusted annual rate of 307,000. For all of 2011, sales of new homes fell 6.2% to 302,000, the worst on record. And first-time jobless claims rose by 21,000 to 377,000 in the week ended 21 January 2012, slightly above expectations, but the four-week average, considered a better gauge of labor-market trends, fell slightly to 377,500.
There were no major, fresh developments coming out of the European Union debt crisis on Thursday, as the Fed's FOMC meeting results have temporarily overshadowed the EU debt crisis.
This week there has been waning optimism that Greek officials and the private sector can agree on a viable plan for their debt restructuring. The market place will continue to closely to monitor the day-to-day machinations coming out of the EU, regarding their sovereign debt and financial crisis. Still, the EU debt crisis is a major underlying bullish factor for the gold market.
MCX tips free trial for February gold futures may start today's session above Rs 27600 with resistance expected near Rs 27800 levels. The strength in the Indian Rupee may hinder the upside for the metal. Today the rupee was seen trading at 49.72/74 to the dollar, firmer than 50.09/10 at close on Wednesday.
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