MARKET TALK:

Liquidity, Weak Rupee Threaten Gold -Standard


While gold's longer-term trajectory remains to the
upside, prices could still push lower, even targeting its 200-day moving
average of $1,600/oz, says Standard Bank. "There are two factors which are
putting downward pressure on gold. The first is weak emerging market currencies
in general, and the Indian rupee in particular. The second is funding stress in
Europe," the bank says. The softness of currencies like the rupee makes the
metal more attractive in those dominations, weakening dollar-denominated gold.
Meanwhile, funding pressure in Europe is threatening global liquidity, a
dominant driver of gold prices, the bank adds.