Bullion

Gold futures in MCX and Comex pared initial gains as traders locked in profits at higher levels. Weakness in crude oil prices and risk averse selling due to weak global equity markets saw bullion drifting in the red zone. MCX Gold Feb registered a high of Rs. 11533 per10 gram, similarly MCX Silver march registered a high of Rs. 21294 per kg for the day. Market closed in positive territory.

· International spot gold touched an intra-day high of $913.580 and Silver $16.51 per Toz, both were trading in positive territory.

· The dollar fell close to a record against the euro yesterday as traders increased bets that the Federal Reserve will lower U.S. interest rates to avoid a recession. Gold has gained 8.9 percent this year, while the dollar has fallen more than 1.9 percent.

· Investment in the StreetTracks Gold Trust, the world's biggest exchange-traded fund, or ETF, backed by gold, increased 10.75 metric tons yesterday to a record 652.56 tons, according to the World Gold Council. Gold has climbed 8.5 percent this year as the dollar dropped 1.9 percent against the euro.

· Sales of gold scrap in India, the world's biggest buyer of the precious metal, have increased as record prices prompt housewives and other consumers to recycle more old jewelry, curbing demand for new supplies of bullion.

· Purchases by India in the three months ended December, the traditional peak consumption season, slumped 77 percent from a year earlier to 40 tons, the Bombay Bullion Association Ltd. said last week. Increased sale of scrap may further dampen demand from the South Asian nation, helping cool a record-breaking rally.

· The biggest annual gain in the Indian rupee against the U.S. dollar in more than three decades meant that domestic gold prices lagged behind global rates last year.

Indian Bullion Spot Market

· Mumbai gold of 0.995-purity closed 50 rupees lower at 11,525 rupees per 10 grams, while gold of 0.999-purity closed 50 rupees lower at 11,575 rupees per 10 grams. Silver of 0.999-purity closed 130 rupees lower at 20,720 per kg.

· Jaipur and Ahmedabad markets were closed on the occasion of Makar Sankranti.

· Chennai gold (995) finished steady at Rs 11,390/10gm and gold (999) at Rs 11,440/10gm respectively whereas Silver (.999) closed at Rs 20,100/kg.

· In Delhi bullion markets, gold (995) closed at Rs 11,700/10gm and gold (999) at Rs 11,640/10gm respectively whereas Silver (.999) closed at Rs 20,620/kg.

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.

Recommendations:

MCX Gold Feb: Sell at 11300-320 for the target of 11250 and 11200 with stop loss at 11345

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.

Recommendations:

MCX Silver March: Sell at 20750-20800 for the target of 20600 and 20450 with stop loss at 20915

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