MUMBAI (Commodity Online): If US inflation concerns, Euro Zone debt crisis helped gold to surge to a recent high of Rs 1230 on Tuesday, subsequent news events don't paint a further bullish picture for the yellow metal. The negative factors for gold come from the vary zone that created the bull rally in gold the other day.
European economy is now expanding at a faster pace than expected with GDP in 16 Euro nations rising 0.2% in the first quarter of 2010 compared to 4th quarter of 2009. A Bloomberg report said that the Euro-area economy may gather strenghth after European leaders earlier this week pledged a rescue package worth almost $1 trillion to counter a spreading Greek debt crisis and restore confidence.
European shares has risen one percent in early Wednesday trade, thanks to strong quarterly results from a number of banks and after Spain unveiled tough austerity measures that eased fears on how euro zone countries will cut budget deficits.
US equities are also expected to rebound after losses suffered in preious session with the futures for the Dow Jones, S&P 500 and Nasdaq all up by 0.2% in early trade, news agencies reported.
Euro's decline has made European good more competitive thereby companies have relied on exports to bolster earnings as domestic household hold back spending.
The Shipping and oil group AP Moller-Maersk reported better than expected first quarter earnings have bolsetered its stocks. Maersk group is in a business often considered the barometer of global economic growth. Container shipping has returned to profit from a year ago loss and the group is expecting a positive result for the division on recovering freight rates.
The recent surge in gold prices reflected the concerns in Euro Zone debt crisis and how far the relief package would help recovery, analysts said. Gold priced in sterling hit a record of 833.49 pounds and in Swiss francs it hit an all-time high of 1,381.16 francs.The holdings of the the world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, stood at a record high of 1,192.150 tonnes as of May 10.
Analysts, however, cautioned that it is too early to guage the impact of the news related to European economy on gold prices as fundamentals are still supportive of gold above $1200 but some downward correction is likely. India's gold futures extended gains on Wednesday morning to trade near its all-time high tracking strong overseas markets, analysts said. Gold Futures at Multi-Commodity Exchange of India have tracked overseas gains as it opened for trading on Wednesday. The active MCX June contract rose to Rs 18185 in morning trade and further rose to Rs 18209 (a gain of 1.74%) in afternoon trade.