MCX Gold continues to hover around Rs 30200 per 10 grams levels, not moving much amid supportive global cues. The global equities rose in mid morning Asia trade after media reports suggested that China was planning fresh economic stimulus for the second half of the year. This was further followed by Former PBOC Adviser Li Daokui's comments that China's 4th quarter growth may be above 8.5% and that the economy is recovering.

In Europe, German CDU lawmaker Barthle stated that some small concessions would be possible for Greece, but must be within existing programme. This indicated that the German stance on providing further stimulus to Greece and other peripheral nations could be getting softening. Recently, the German central bank had noted that it remains critical of having the ECB purchase sovereign bonds.

A reflection of this upbeat mood in risky assets pulled the yields on the peripheral sovereign bonds down. Italy 10-year bond yield slipped nearly 4 basis points to 5.70% while Spanish 10 year benchmark bond yield is also down 4 basis points to 6.18%. Most of the European stock markets are quoting with gains to the tune of 0.30-0.50%. 

Gold ended on a flat note yesterday though the underlying trend remained positive. The commodity had edged up in the world markets today on supportive equities and a boost to the sentiments after prices broke above $1620 per ounce levels. The commodity has been benefiting from ideas that the European Central Bank is weighing a plan to cap borrowing costs for struggling euro-zone governments by buying unlimited amounts of bonds. The China hopes did the trick to push the metal near to $1630 per ounce today. 

The global demand picture remains rather grim for Gold. Global gold demand in Q2 2012 was 990.0 tonnes (t), down 7% from the 1,065.8t in Q2 2011 according to the latest World Gold Council's Gold Demand Trends report. However, in value terms gold demand remained relatively stable year on year at US$51.2 billion, compared to US$51.6 billion in Q2 2011. The report stated that there has been a moderation in the gold demand from India as well as China- two of the biggest Gold consuming nations in the world. In India, investment and jewellery demand fell to 181.3t, down from 294.5t in Q2 2011. At 56.5t, investment demand was less than half the level in Q2 2011. 

However, the WGC noted that the ongoing sovereign debt crisis in the Eurozone underpinned European investors' enduring conviction in gold's capital preservation properties. Demand for bars and coins from retail investors posted a 15% year-on-year increase to 77.6t; 19% higher than the five-year quarterly average of 65.2t.

The metal has still been pounding higher and much of the gains have been due to the surge in equities and benign undertone in the US dollar which tested a two week low of 1.2427 against the Euro today. The commodity quotes at $1627, up $4 per ounce. MCX Gold futures topped at Rs 30223 per 10 grams today, yet again failing to break convincingly above Rs 30220 levels. The metal had topped highs of Rs 30220 per 10 grams yesterday. The counter is quoting at Rs 30205, up Rs 19 per 10 grams on the day.

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