DAILY COMMODITY MARKET STRATEGY- 5 Apr 2016

Gold held losses from a two-day decline on Tuesday on worries the Federal Reserve will hike US interest rates earlier than market expectations and on outflows from bullion-backed exchange traded funds.

FUNDAMENTALS

1. Spot gold was little changed at USD 1,215.55 an ounce by 2345 GMT, after dropping 1.4 percent in the past two sessions.
2. Gold had posted its biggest quarterly rise in nearly 30 years in the March quarter, rallying 16 percent as expectations faded that the Fed would move to normalise interest rates due to concerns over the global economy. The US central bank raised rates in December for the first time in nearly a decade.
3. The metal is highly exposed to rising rates, which lift the opportunity cost of holding non-yielding assets, while boosting the dollar.
4. Gold's decline began after data on Friday showed non-farm payrolls rising by 215,000 last month, higher than expectations of 205,000, underscoring the strength in the US economy.
5. Gold failed to get a lift from a softer dollar.
6. Physical markets did not offer much support. India's gold imports in February fell 34 percent compared with the same period last year, news agency NewsRise Financial reported on Monday, citing a government official, as high prices and hopes for a cut in import taxes kept buyers away.

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