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MTECHTIPS:-Precious Metals Preview: COMEX Gold Hits Three Week High Following Fisher Comments

MTECHTIPS:-Precious Metals Preview: COMEX Gold Hits Three Week High Following Fisher Comments

Gold hit a three week high yesterday after carving out a steady recovery last week. Gold stayed under pressure last week but witnessed sustained support around five and half year lows amid strong US gold coins demand and bargain buying. Traders are also becoming wary of the global miners responding with production cuts if gold falls further from hereon. Gold managed to stay supported after a strong US nonfarm payrolls data made it almost certain that the US Fed would hike the interest rates from record lows next month, marking its first such hike in nearly a decade. The US added 215,000 nonfarm jobs- a sound performance that indicated that the labour markets remain on track. The nation’s unemployment rate was also unchanged at 5.3% – its lowest level in seven years. However, Stanley Fischer, the vice chairman of the US central bank stated yesterday that the US Federal Reserve is concerned about low inflation and won’t move before it sees inflation returning to more normal levels. This boosted the DOW by more than 200 points and offered excellent support for gold too. The COMEX Gold futures rose around 1% yesterday, breaking above the key $1100 per ounce mark on a closing basis. The metal has eased a bit in Asia and quotes around $1100 per ounce, down 0.37% on the day. MCX Gold futures jumped well above Rs 25000 per 10 grams mark and closed at Rs 25122 per 10 grams. This break above Rs 25K is turning crucial and further gains could be seen in the counter today if COMEX Gold holds above $1100 per ounce. Barrick Gold Crop, the gold mining major reported that its adjusted second-quarter net earnings were $60 million compared to $159 million in the same period a year ago. Falling gold prices are taking a severe toll on the earnings of the major mining companies. Barrick had a net loss for the quarter of $9 million compared to a net loss of $269 million, in the prior-year quarter. For the quarter ending June 30, Barrick received an average gold price of $1,190 an ounce, down from $1,289 in the same period a year ago. Gold production in the quarter fell to 1.45 million ounces from 1.49 million ounces, while all-in sustaining costs came in at $895 an ounce, up from $865 a year earlier.
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