COMEX Gold Just Under $940 Ahead Of New York Open - August 01, 2009

Gold was seen consolidating around $940 per ounce mark in today's session as the commodity market participants eyed the steady undertone in the global markets. However, some selling pressure was seen at higher levels as traders covered their open positions ahead of the weekends. Earlier in the week, South African Trade union Solidarity signed wage agreements in both the gold and coal sectors in the Chamber of Mines yesterday.

The union says the agreements are favorable and is particularly satisfied that the agreements could be reached without strike action.

Meanwhile, in Asia today, COMEX Gold rose in tune with the global asset markets today, reconfirming a pattern, which has been in the play for the last few days.

The commodity is showing signs of re visiting $950 mark yet again given that there are overwhelming concerns that strong demand from India and China would not pull prices down much even if the dollar appreciates further.

The sustained high rupee price for gold is not having a significant impact on trade demand for the metal in the run-up to the wedding and festival demand in India, according to the World Gold Council (WGC).

Oil rose above $67 a barrel today, boosted by stock markets in Asia. The US stock futures also opened higher today signaling a potential rebound by Wall Street from the previous day's decline amid an ongoing flood of major corporate earnings data. Asian stock markets were higher Friday, buoyed by Wall Street's gains.

COMEX Gold futures for December are trading just under $940 per ounce, coming off a high of $942.70 per ounce.

MCX Gold witnessed some selling above Rs 14700 mark, coming off a peak at Rs 14728 and currently trade at Rs 14646, down Rs 50 or 0.34% from the previous close with a massive 12% drop in the open interest.

The near month August contract trades at Rs 14646, down Rs 56 with a massive decline of 23% in the open interest.

Reduced Monsoon May Dent Economic Recovery - August 01, 2009

Moody''s expressed concern that a poor monsoon may dent India''s economic recovery. Thus a decline in agricultural output and a consequential fall in farm income may not just limit rural spending but widen the gap in wealth between rural and urban India, damaging its social fabric. India''s rural population accounts for a large share of total consumption hence, a generous slowdown in rural spending will limit overall consumption growth.

However, although the farm sector accounts for about 18% of the country''s gross domestic product, farm incomes is a key to the survival of about two-thirds of its population.

Moreover, a considerable fall in this year''s food grain output may activate a price rise, adding that the Reserve Bank''s upward revision of inflation risk to 5% for 2009-10 from 4% earlier is an indicator of the tough times to come.

Not only this, the farming cycle during the Rabi may be affected, raising apprehensions about a dip in output in the immediate following season as well, if the lack of improvement in rainfall stretches into August.

However, the research major feels urgent upgrading in farm technology; better irrigation facilities and major drive to overall agricultural infrastructure hold the key to sustainable food security in the country.