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Gold prices remain firm near 5-month highs hit last week as lingering inflation fears and disappointment on the US monthly job numbers preserved the appetite for precious metal.

Global Economy

* Global equities gained last week. US Dow Jones index gained 1.32 percent. European peers were higher. Meanwhile, China’s SSE index gained 2.09 percent. Among Asian peers, India’s Sensex gained while China’s SSE index and Japan's NIKKEI shed.

* US economy added 559000 jobs Non-Farm sector in May of 2021, above an upwardly revised 278000 in April, leaving the employment about 7.6 million jobs below its peak in February 2020

* US ISM Manufacturing PMI rose to 61.2 in May of 2021 from 60.7 in April, pointing to slightly stronger growth in factory activity

Currencies

* Greenback settled with moderate gains of 0.12 percent against the rival currencies after testing a three week in previous week.

* Euro and Chinese Yuan slipped lower against US dollar. while Japanese Yen managed to close on a positive territory against US dollar.

* Indian Rupee slipped as well in previous week and finally closed with loss by 0.63 percent and settled at 72.86 marks against dollar.

Gold

* Gold prices hovered near five month high. In the last week, LBMA spot gold COMEX gold futures shed 0.67 percent last week.

* India’s domestic Mumbai spot prices of gold eased 0.20 percent, MCX futures prices gained 0.12 percent during last week.

* The SPDR gold backed ETFs physical holdings increased by 2.57 percent in May and eased in the first week of June.

* Global gold ETFs lost 18.3 tonnes equivalent of USD 1.1 billion, or -0.5% of AUM in April - World Gold Council

Outlook

International Gold: Inflation worries and a soft US job market numbers continue to support the metal’s demand as an investment asset. A weak US dollar and concerns over the third wave of Covid 19 in many emerging markets too assisted the metal to edge higher. Meanwhile, an increase in global industrial growth, rising global equities and limited physical market activities unlikely to retain the positive momentum.

Domestic Gold: A strong INR and limited physical market activities due to pandemic related lockdown in many parts of the country limited gains despite its overseas sentiment was positive.

Technical View: London Spot: Prices required to break and sustain above $1915 are needed to continue rallies. Else, there are chances of immediate correction in prices.

MCX: Expect a choppy trade inside Rs 49700-47000 levels initially and breaking any of the sides would suggest a fresh direction to the commodity.

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