>Precious metals trade sharply down; equities surge

Mumbai - Gold traded down in global market weighed by U.S. dollar strength and higher equity markets but traders and analysts said the metal could trend higher if the dollar weakens. Following the suite gold-silver futures traded lower on Multi Commodity Exchange Monday on selling pressure from higher levels and strong dollar. As of now precious metals are taking cues from the global market and traded lower on the domestic front.

The gold June futures traded down by Rs 201/10gm and silver May futures down by Rs 204/kg.

MCX most active gold June contract opened down by Rs 28 at Rs 14,719/10gm. The contract saw movement between Rs 14,501 and Rs 14,719/10gm. At 10.35 am IST, the contract traded down Rs 201 at Rs 14,546/10gm. Total volumes in June contract recorded 5376 lots.

MCX gold mini the most active June contract opened down by Rs 22 at Rs.14, 725/10gm. The contract saw movement between Rs. 14,542 and Rs. 14,725/10 gm. At 10.38 am IST, June contract traded down by Rs 197 at Rs. 14,550/10 gm. Total volumes in June contract recorded 6825 lots.

Benchmark silver July contract opened down by Rs 26 at Rs 22,491/kg. The contract fluctuated between Rs 22,265 and Rs 22,500/kg. At 10.39 am, IST, silver July contract traded down by Rs 204 at Rs 22,361/kg. Total volumes in July contract recorded 31925 lots.

MCX silver mini June futures opened up by Rs 29 at Rs. 22,695/kg. It fluctuated between Rs.22,299 and 22,695/kg. At 10.40 am mini silver June futures traded down by Rs 202 at Rs 22,364/kg. Total volumes in June contract recorded 4178 lots.

India gold futures dn 2.3% on strong INR

Singapore - India June MCX gold contract down 2.3% at INR14,408/10 grams due to sharp rise in INR following rally in local equity markets. "The weakness is likely to continue for the next one-two sessions because of the rupee," says Debjyoti Chatterjee of Admisi Commodities. Physical demand still weak, although some stockist buying will be seen at current levels, he adds; tips contract to fall further to INR14,360/10 grams level today.

Asia spot gold edges up, inflation concerns

Sydney - Spot gold nudged higher in Asia Monday, lacking specific news to drive prices but holding firm on long-term concerns about inflation.

At 0716 GMT, spot gold traded at USD931.65 a troy ounce, up 75 cents on the New York close.

Inflation as a future threat has been a focus for investors since the U.S. economy showed some signs of bottoming, even though inflation is unlikely to take off for some time.

"But people feel that if they don't get in on inflation now, they'll miss the boat. We expect long-term inflation to be a positive factor for gold," said a Sydney-based trader.

U.S. economic data on Friday showed again some evidence that the worst of the recession may be over. April consumer prices were unchanged and while industrial output still fell, it declined at a slower pace than in March.

On the charts, gold faces resistance at usd935/oz and usd965/oz, said Barclays Capital, adding that hopes gold could again break out to touch the March 2008 record high of usd1,032/oz looked premature.

"The previous consolidation phase lasted 16 months before breaking to new highs; the current range has been in place for 14 months, which gives further room for consolidation at higher levels before a meaningful breakout to all-time highs later in 2009," Barclays said.

Physical demand for gold continues to disappoint.

Turkey's gold jewelry exports fell 23.21% on the year to 4.983 metric tons in April.

That left gold exchange-traded funds as the only source of demand, with holdings in the SPDR Gold Trust fund, listed in New York, unchanged at 1,105.62 tons.

At 0733 GMT, spot silver traded at usd14.06/oz, up 11 cents. Platinum was up usd5.50 at usd1,106.50/oz and palladium unchanged at usd223.00/oz.

Gold futures on Tocom were down Y5 at Y2,860 a gram for the April 2010 benchmark contract, while platinum futures were down Y61 at Y3,410/gram.

Spot gold eases on stronger dollar, weak oil

London - Spot gold eased Monday as the dollar strengthened and oil prices declined.

Traders said the euro might give back some of its recent gains against the dollar this week, possibly dragging gold lower.

At 0843 GMT, spot gold was trading at $929.20 a troy ounce, down 0.16% on the day.

Spot silver was down 0.25% at $13.895/oz.

Spot platinum rose 0.55% to $1,106.50/oz and spot palladium was down 0.2% at $222/oz.

"We lost a little bit on profit-taking on fears that we can fall more with the weaker EUR/USD," said Commerzbank precious metals trader Michael Kempinski.

The EUR/USD looks like it will retrace lower in coming days, which could lead to gold testing a key support at $925/oz, Kempinski said.

A break below there could lead to a selloff, although a pickup in risk aversion may avert selling, he added. "We have to see if the safe-haven buying comes back into the market."

Traders said the market was relatively quiet and market participants were waiting for platinum-specialist Johnson Matthey's annual platinum and palladium report for 2008, due out later Monday.

"With platinum week this week, people will be focused on platinum and palladium," said a senior precious metals trader in London.

UBS analyst John Reade said the report should contain positive news, especially about Chinese demand and struggling mine production.

"[The] longer-term outlook looks strong and we see no reason why platinum will not trade sharply higher in coming years," Reade said in a report Friday.

Source: COMMODITIESCONTROL