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Why gold fell marginally last week?
16 February 2009 22:47:30

On 09th February 2009, Gold fell 2 percent on profit taking after the precious metal failed to break above $930 an ounce, investor’s monitored U.S. Congressional debate of an economic stimulus. There was not any follow-through (buying) to support the prices. The Senate was due to vote on the stimulus plan and bank rescue package, clearing the way for passage of the plan. SPDR Gold Trust, the largest bullion-backed exchange traded fund, said its holdings were static on Friday after rising to a record on two successive days.

On 10th February 2009 Gold futures went sharply higher, boosted by flight-to-quality buying as Wall Street, hoping for more specifics from a long awaited bank rescue plan, sold stocks and other assets. Renewed investment interest was seen above $910, even as investors in the past tended to sell gold and opt for liquidity when the Dow Jones industrial average. Treasury's plan did not alleviated existing concerns, and the likelihood of a wait-and-see attitude for investors turned out to be bullish for gold. Sharp investment inflows continued to bolster prices. The world's largest gold-backed exchange-traded fund, SPDR Gold Trust holdings jumped more than 10 tonnes to a record 881.87 tonnes.

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On 11th February 2009 Gold rose on the COMEX division of the New York Mercantile Exchange. Renewed investment interest was seen; more general investment funds had increased allocation into gold. The largest gold-backed exchangetraded fund, SPDR Gold Trust holdings jumped over 12 tonnes to record 894.72 tonnes. Bargain hunters pushed U.S. stock prices up, while gold shot to a six-month high and the dollar gained versus the yen as investors gave a cold shoulder to the U.S. government's revamped bank rescue plan. U.S. and euro zone government debt prices rose as worries about the effectiveness of the plan unveiled by U.S. Treasury Secretary Timothy Geithner bolstered their safe haven appeal.

On 12th February 2009 Gold futures climbed above the $950 level, ignoring a stronger dollar and weaker energy prices as investment buying surged in bullion-backed exchange-traded funds amid economic uncertainties. Sharp investment inflows continued to bolster prices as the world's largest gold-backed exchange-traded fund posted its second largest daily gain in holdings. SPDR Gold Trust holdings jumped over 40 tonnes to a record 935.09 tonnes.

On 13th February 2009 Gold futures dropped 1.5 percent as investors locked in recent profits ahead of the weekend, even as investment buying continued to rise in bullion-backed exchange-traded funds amid financial uncertainties. Gold remains Supported by massive investment inflows, growing lack of confidence in the U.S. government's effort to deal with the financial crisis, and worries over future. Profit-taking and position squaring was seen as the market took a breather after a sharp gold rally. SPDR Gold Trust bullion holding rose to 970.57 tonnes.

Courtesy: Emkay Commotrade Ltd.