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% in March, from 7.7% 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% 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% drop in the open interest.