Gold Review

Gold futures  dropped yesterday from record on optimism that the US congress will pass a compromise bill to raise the US debt limit to stave off the default. Gold future for October delivery made a low of $1608.10 although it revived nicely to settle 0.58% below prior closing at $1620.40.

 The dollar index gained over half a percent at settlement as the US clinched the debt deal at the very last moment, just one day prior to the deadline of Aug.2

 The Asian equities closed at a positive note on confidence that the US regulators will take definite step to tame the default. US and Europe stocks however pared the initial gains after reports showed slump in manufacturing indexes

 Manufacturing indexes from the US to Europe and China declined in July raising the concern that the global recovery is losing momentum

 Holdings in the SPDR Gold Trust, the world's largest goldbacked exchange-traded fund  remained unchanged at 1263.57 tons as on 1st Aug

 The gold-silver ratio improved to 41.22 from 40.63

OUTLOOK:

At the Globex platform gold is seen quoting up by $1.30 at $1621.70. The House of Representatives approved legislation to raise the US debt limit by at least $2.1 trillion and cut federal spending by $2.4 trillion or more, just one day before the deadline. The plan goes to the Senate for a final vote today. The

US deal offered  breather but downgrade looms as the rating agencies threatened and anticipating so, the dollar index is showing weakness. The Asian equities are trading at a downside on slowing manufacturing growth aver the globe. Coming to the economic data front, the US personal income might see a reduction while UK PMI construction may also slid a bit. Dollar therefore might see some pressure in the evening. Since the ceiling has been raised and US for a shorter while is out of danger, precious metals are likely to feel the heat and is expected to retreat a bit. Although the rupee depreciation might push the metal to grow at the Indian context, a slide can’t be over looked.