Gold manages to hang around $915; Faces Stiff Resistance

Strong demand from India on account of Akshya Tritiya keeps the downside limited

Gold managed to hold on in Asia and crept up marginally to hit a high of $919.70 an ounce for the COMEX June futures in the electronic session. Weakness in equities and strong demand consideration from India, the largest Gold buying nation supported the commodity. India celebrated Akshya Tritiya today and the demand of the yellow metal has been strong from the retail buyers as well as the people who seek it as an alternate investment avenue.

However, the metal slipped in London as Euro slipped a bit, giving up on expectations that more rate cuts might be about to follow from the European Central Bank (ECB) in the near term. The ECB governing Council Member Mario Draghi Saturday said that, although there were some positive signs for a global economy mired in recession, deflation remains one of the risks.

"The risks are of deflation, of a worsening in the fall in output and a rise in unemployment," Draghi said when asked to specify what finance officials from the Group of Seven leading economies saw as risks to the world economic outlook.

The ECB is widely expected to cut the interest rate from a historical low of 1.25% on May 7th, when it will hold its next policy meet.

The single currency dipped from levels above 1.3200 to 1.3123 right now. The currency pared the last three session's gains to edge down as traders expected a narrowing interest rate differential and ideas that the US economy might have bottomed out in the last quarter of 2008. The US GDP figures for the first three months of the current years are widely expected to come in below the bizarre contraction of the economy in the last quarter of 2008.

Things are looking up for the global economy. G7 finance officials said in a statement Friday that economic activity should begin to recover later this year amid a continued weak outlook, warning that downside risks persist. However, a recovery of this sort, with the money printing presses running in full wing in US and UK is bound to lead to a massive inflationary spiral, supporting Gold and the entire precious metals pack. COMEX Gold currently trades at $913.40, down 70 cents from the previous close.

MCX Gold futures for June trade at Rs 14786, up Rs 162 or 1.11% from the previous close with 8% increase in the open interest.