Broker's Notes: Gold climbs; dollar shave gains against the yen

Gold

Gold gained on Thursday after holdings in the SPDR Gold Trust rose again, showing that investors remained faithful to the metal in light concerns about the global economy and volatile equity markets. A pick up in physical demand in main consumer India during the festive season is seen supporting prices, but gold remains vulnerable if investors have to sell positions to cover any sharp fall in equity markets caused by continued scepticism about the global economic recovery. For now, gold prices remain supported by a gain posted in the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, which said its holdings rose to 1,295.516 tonnes by Aug. 18 from to 1,294.604 tonnes on Aug. 17. The holdings hit a record at 1,320.436 tonnes on June 29.

Dollar

The dollar pared gains against the yen on Thursday after sources familiar with the matter said the Bank of Japan is highly unlikely to hold an emergency meeting later in the day. Rumours had circulated in the market that the BOJ would hold an emergency policy meeting at 2 p.m. local time (0500 GMT) after a media report that the central bank had started considering additional monetary easing steps. The most likely option under consideration is expanding the BOJ's fund-supply tool put in place in December. The central bank may either expand the fund supply volume to 30 trillion yen ($352 billion) from 20 trillion yen, or extend the duration of cheap, fixed-rate loans to banks to six months from three months.

Euro

The euro slipped after a Spiegel report that austerity steps to fix Greece's debt trouble are damaging its economy but falls in the currency were seen limited as the report provided few fresh incentives. Further slide was however halted by the report on German producer prices. German Producer Prices came in expected coming in 0.5% versus 0.2% forecast, but were still lower than last month’s 0.6% reading. However on a year over year basis,  factory gate prices rose at their fastest pace in 24 months, boosted by rising energy prices. Earlier in the day the euro fell 0.3 percent to $1.2783 and support for the currency is seen at the 100-day moving average at $1.2776, while the upside is heavy around 1.2900.

Oil

Crude oil traded near the lowest in two days after the U.S. government said total petroleum stockpiles surged to the highest level in at least 20 years. Oil dropped after yesterday’s Energy Department report showed inventories of crude and fuels climbed 5.34 million barrels to 1.13 billion last week. Supplies of distillate fuel, which include heating oil and diesel, rose to the highest since 1983. Crude pared losses after equity markets in Asia gained.

Source: Richcomm Global, Dubai; www.richcommglobal.com