Gold Up Again After A Crash

Gold futures inched up again after prices crashed by nearly $50 yesterday hitting multiyear lows on growing expectations the U.S. Federal Reserve will slow the pace of economic stimulus later this year.
Gold for August is trading up $8 at $ 1238 an ounce on the COMEX division of the New York Mercantile Exchange. Yesterday, it fell $45.30, or 3.6%, to close at $1,229.80 an ounce the lowest close for a most-active contract since August 2010.
Gold prices so far this week have lost nearly 4.5%, and are down 11.6% in the month-to-date as the end of June trading approaches. Gold futures are on track for a decline of 23% this quarter.
The weak US GDP data also supported the sentiments for gold today as it raised the hopes that Federal Reserve will maintain its bond purchases for longer.
U.S. stocks jumped Wednesday, pulling benchmark indexes into positive terrain for the week, as a downward revision in economic growth calmed concern about U.S. monetary policy. Asian equities also jumped tracking the US equities and robust growth in China industrial profits also boosted the markets.
China’s Shanghai Composite rose 1.2% after dropping in 15 of the past 17 trading days. Japan’s Nikkei Stock Average rose 1.8%, Hong Kong’s Hang Seng Index climbed 1.5%, and Australia’s S&P/ASX 200 gained 1.3%.
The advances followed a higher finish on Wall Street overnight after U.S. first-quarter GDP growth was revised down to 1.8%, from an earlier estimate of 2.4%.
Wells Fargo Advisors cut its year-end target range for gold, saying it now expects to see prices settle at $1,225 to $1,325 an ounce. It has previously expected prices to end the year at $1,475 to $1,525 an ounce. Wells Fargo also reduced its 2013 inflation target to 2% from 2.5%.
Goldman Sachs, Credit Suisse and HSBC downgraded their gold forecasts this week.
Gold production in China, the world's largest producer, is expected to rise about 10% this year to a record even as bullion prices slump, the nation's mining association said, according to media reports. The country recorded output of 403 tonnes last year. Production gained 12% in the first four months from a year earlier to 122.89 tonnes, according to the producer-funded China Gold Association.
MCX August gold futures may open today’s session near Rs 26300 levels with resistance near Rs 26500 levels.