Dollar Declines Ignite Rally In Yellow Metal

Dollar declines last night brought rally in Gold prices as the same surged by more than on COMEX. Rising Crude prices also supported the gains. The dollar index, which tracks the performance of the greenback against a basket of other major currencies, edged down 0.1% at 77.70. Gold, as a dollar-denominated commodity, benefits from dollar weakness.

Most-active gold futures for February closed up $12.20 or 1.5 percent at $815.40 an ounce on the COMEX. MCX Gold also modified itself by Rs 185 during the week to close the session trades at Rs 10355 per 10 grams.

Gold warehouse inventories were unchanged at 7.4 million troy ounces as of late Thursday, according to Nymex data. Silver stockpiles fell by 26,694 troy ounces to stand at 133.8 million troy ounces, while copper supplies edged down to 15,184 short tons, off 112 short tons

The yen suffered widespread losses against the majors in the Friday session as traders shifted back into the carry trades. US equities rallied ahead of the holidays, with both the Dow Jones Industrial Average and the Nasdaq up by around 1.5% in the New York afternoon. Prompting the gains were upbeat US economic data, which revealed continued resiliency with the American consumer. The greenback jumped to its highest level against the yen since November 7th at 114.16 while trading sideways versus the euro and sterling.

The US economic reports consisted of November consumption, core PCE, personal consumption, personal income and the University of Michigan consumer sentiment survey. The November adjusted consumption exceeded estimates for an increase to 0.6% from 0.2%, instead jumping to 1.1% while personal consumption for November edged up to a 0.5% reading from a flat reading in the previous month.

The PCE index revealed lingering inflationary pressure in the economy, up 0.6% m/m from 0.3% and 3.6% compared with a 2.9% in the previous year. The core figures were slightly higher than the previous readings at 0.2% m/m and 2.2% y/y for November. The University of Michigan consumer sentiment survey fell to 75.5, less than anticipated but down from the preliminary December reading of 75.5.