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U.S. Gold futures settled down 1.55 percent at $1,755.4 an ounce after hitting the week high of $1,782.1. Gold fell nearly 1 percent on Friday, its biggest daily drop in more than two months, as improving U.S. consumer sentiment and jobs data stirred concern the Federal Reserve might curb the monetary stimulus that has boosted gold prices. This morning Gold remain flat after previous fall to the lowest level in more than two weeks on speculation that China may not need additional stimulus after exports grew more than estimated in September.
Prices retreated by 0.84% at the beginning of the week as the European markets at present are carrying massive weight on the global market trend. Precisely, market will be eyeing the EU leaders’ summit on Oct 18-19. The euro also fell near 0.35% against the dollar while the Asian shares dropped despite China’s export grew more than expected last month but the overseas shipments to the EU fell for a fourth straight month. Going ahead we expect gold to remain under stress after Chinese PPI fell and market is waiting for the PBOC for steps of easing. Later today, the US advance retail sales are likely to maintain almost the prior pace, while the US empire state manufacturing is likely to improve a bit.
Holdings of the gold backed exchange traded funds fell for the second straight session to 74.979 million ounces as on Oct. 11 and better US economic releases might temper the metal’s appeal. Bullion posted four straight monthly increases prior to October. Gold jumped to an 11-month high last Friday, but failed to rise above $1,800 an ounce, triggering technical weakness.
Gold holdings of SPDR gold trust, the largest ETF backed by the precious metal, increased to 1,340.52 tons, as on Oct. 9. Silver holdings of iShares silver trust, the largest ETF backed by the metal, declined to 9,894.58 tons, as on Oct, 11.
For the coming week we expect gold to be flat to weak. Concern that duration of a quantitative easing plan may not be as long as what was initially anticipated should keep gold prices suppressed for the next week. Barring any easing announcements from China over the next few days, Spain will most likely be the catalyst leading up to the EU Summit and then markets will react to press releases, interviews, rumors and statements.
Ongoing tensions between Syria and Turkey continue to mount with Turkey moving tanks into attack positions at the Syrian border. An escalation could support gold over the next few days. Also rumors are that Japan and China are holding secret talks to discuss the mounting tension over the islands signallings Beijing's willingness to negotiate.