Broker's Notes: Gold opens firm; oil rallies to above $91

Gold

Gold opened firm on Monday, after posting a 30 percent gain in 2010.  The sovereign debt crisis in Europe will continue to help drive investors to park their value in gold and other precious metals. Investors are eyeing the non-farm payroll data for December out of the United States, which is expected to show an improvement from the previous month, consistent with other signs that the economy is strengthening. On the same day, Federal Reserve Chairman Ben Bernanke is scheduled to testify on the economic outlook before Congress. 

Indian Rupee

The Indian rupee witnessed a range bound trading activity in the early deals of Monday as a broad rise in the dollar against major currencies was offset by gains in shares and other Asian peers. The rupee had risen 4.1 percent in 2010, compared with 4.7 percent in 2009. Indian shares were trading 0.5 percent higher, with automobile makers leading the gains on strong December sales. Foreign funds have bought $758 million worth of shares in the five trading sessions until Thursday, taking the total in 2010 excluding the last trading session, to a record $29.2 billion, on top of $17.5 billion pumped in the year before. One-month offshore non-deliverable forward contracts <PNDF> were at 44.90, weaker than the onshore spot rate.

Oil

Oil extended its rally above $91 a barrel on Monday on optimism the global economic rebound is gathering momentum, which could drive demand growth and send prices above $100 later this year. Traders will scour US Dec manufacturing survey data, initial claims for jobless benefits and December employment figures, due later this week, for more clues on the pace of recovery in the world's top energy consumer. Upbeat US data on jobless claims and regional manufacturing activity last week had already buoyed expectations the economy had gained a firmer footing as the year ended, and was on track for a stronger performance in 2011  

US Manufacturing data to come out

Later in the day, the Institute for Supply Management (ISM) will publish its high-profile measure of US national factory activity, which is expected to show the pace of expansion in the manufacturing sector had quickened modestly in December, reinforcing signs of the economy's gradual recovery.  Economists are forecasting the ISM's factory activity index to edge higher to 56.9 from 56.6. Readings above 50 point to growth. The Chicago purchasing managers survey reported last week a surge in Midwest factory activity to its highest level since 1988, prompting some economists to brace for possible upside surprises in ISM's national survey. December employment data due on Friday could also provide price support. A preliminary Reuters survey shows economists expect nonfarm payrolls increased 126,000. The steady decline in US jobless claims in recent weeks also suggests the pace of job creation picked up in December after a dismal November. But that is still not enough to significantly reduce the unemployment rate, which is expected to edge down to 9.7 percent from 9.8 percent in November.  

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