Gold loses lustre on seasonal weakness …

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Gold prices recovered marginally on fall in European stocks, but remains bearish on seasonal weakness. After posting the biggest daily fall since December on Tuesday, spot gold recovered form $1260.74 to $1265.33 announce .

According to the CFTC, the managed money net gold positions have declined 4.21% to a two-month low of 90,358 contracts during the week of 20 May.

Gold-backed ETP holdings were as low as 1,715.84 tons on 22 May, a drop of 47 tons this year. As geopolitical tensions ease and stocks rally when growth rebounds in the U.S., the demand for hedges has also declined. Gold prices have shown seasonal weakness in May and June while the months of July to September have shown the greatest strength. Renewed political turmoil may be able to prop up gold a little, Sharps Pixley observed in a report.

At India’s Multi Commdity Exchange (MCX) Gold for June delivery slipped to below Rs 27000 per 10 grams at Rs 26865 per 10 grams in a day which witnessed heavy short seling. Open interest rose 12%. The Reserve Bank of India (RBI) eased restrictions on import of gold by trading houses and the newly elected Narendra Modi government is likely to reduce gold import duties from 10% which is bearish for the commodity.

AS geo-political tensions have eased for the time being, safe haven demand has also fallen while improved recovery prospects for US economy and strength of US dollar continues to weigh on gold prices.

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