bullion

Indian spot gold traded lower tracking global leads and as local investors opted to book profits at elevated price levels. MCX Gold Feb contract was trading in the range of Rs. 10830-10950 per 10 gram with a loss. MCX Silver March also traded weak in the range of Rs. 19750-20050 per kg.

International spot gold traded below $860 levels as a hardening greenback and softening crude prices reduced the yellow metal's appeal as a hedge against inflation.

The dollar rebounded as technical charts used by some traders indicated recent losses may have been excessive. Dollar- denominated gold tends to fall when the currency rises as this makes it more expensive for holders of other currencies. Still, the prospect of U.S. interest rate cuts limited gold's losses.

A U.S. government report on Jan. 4 showed unemployment rose to the highest in two years, raising the prospect of further interest rate cuts to stimulate the economy. The report showed payrolls grew by 18,000 last month, about one-quarter the rate forecast by economists, and unemployment increased to 5 percent.

MCX Gold Feb (Daily Chart)

Technical Outlook:

Momentum studies are still bullish but are now at overbought levels and will tend to support reversal action if it occurs. The daily stochastics have crossed over up which is a bullish indication. The stochastics indicators are rising from oversold level, which is bullish and should support higher prices. The market's short-term trend is positive as the close remains above the 9-day moving average. The downside closing price reversal on the daily chart is somewhat negative. The 9-day RSI over 70 indicates the market is approaching overbought levels. It is a mildly bearish indicator.

Recommendations:

MCX Gold Feb: Sell at 10940-950 for the target of 10900 and 10870 with stop loss at 10980

MCX Silver Mar (Daily Chart)



Technical Outlook:

Momentum studies are still bullish but are now at overbought levels and will tend to support reversal action if it occurs. The daily stochastics have crossed over up which is a bullish indication. The stochastics indicators are rising from oversold level, which is bullish and should support higher prices. The market's short-term trend is positive as the close remains above the 9-day moving average. The downside closing price reversal on the daily chart is somewhat negative. The 9-day RSI over 70 indicates the market is approaching overbought levels. It is a mildly bearish indicator.

Recommendations:

MCX Silver March: Sell at 19990-20050 for the target of 19900 and 19820 with stop loss at 20090

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