Bullion

Bullion traded very volatile on Tuesday on MCX, market traded weak initially following previous days movement and turned positive as Fed announced interest rate cut.

· MCX Gold Feb traded very bullish after registering a low of Rs. 10848 per 10gram, market jumped to trade above Rs. 11300 per 10 gram. Similarly MCX Silver March registered days low at Rs. 19853 per kg and bounced toward the high and traded above Rs. 20800 per kg.

· International spot gold traded above $890 per toz and Silver was trading above$16.02 level after registering a low of $848.40 and $15.16 respectively.

· The Federal Reserve, confronted with a global stock sell-off fanned by increased fears of a recession, slashed a key interest rate by three-quarters of a percentage point on Tuesday and indicated further rate cuts were likely.

· The surprise reduction in the federal funds rate from 4.25 down to 3.5 percent marked the biggest funds rate cut on records going back to 1990. Federal Reserve Chairman Ben Bernanke and his colleagues took the action after an emergency videoconference on Monday night; a day when global markets had been pounded by rising concerns that weakness in the world's largest economy was spreading worldwide.

Indian Bullion Spot Market

Precious metals witnessed a slide in spot markets tracing the meltdown in Asian equity markets on US recession concerns.

· In Mumbai markets, gold (995) and gold (999) declined by Rs.135 to finish at Rs.11,055/10gm and Rs.11,105/10gm respectively whereas Silver (.999) closed down by Rs.320 at Rs.20,150/kg. Arrivals in gold were at 100 kilos and traded volumes were at 100 kilos whereas arrivals in silver were at 100 kilos and volumes at 150 kilos.

· Chennai gold (995) and gold (999) was down by Rs.200 to finish at Rs.11,150/10gm and Rs.11,200/10gm respectively whereas Silver (.999) closed at Rs.19,700/kg, falling by Rs.400.

· Jaipur gold standard dipped by Rs.90 to close at Rs.11,150/10gm whereas Silver (.999) was down by Rs.300 to close at Rs.20,000/kg.

· Ahmedabad gold (995) sagged by Rs.85 to close at Rs.11,045/10gm and gold (999) by Rs.90 to close at Rs.11,090/10gm whereas Silver (.999) closed at Rs.20,100/kg, down by Rs.300.

· In Delhi bullion markets, gold (995) and gold (999) decreased by Rs.120 to close at Rs.11,100/10gm and Rs.11,150/10gm respectively whereas Silver (.999) was down by Rs. 750 to end at Rs.19,400/kg.

MCX Gold Feb (Daily Chart)



Technical Outlook:

Momentum studies are bullish now 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:
MOrning Gold Sell @ 11270/11285 for the target of 11240/11220 with stoploss 11315
intraday
MCX Gold Feb: Buy at 11160-175 for the target of 11230, 11300 and 11365 with stop loss at 11132



MCX Silver Mar (Daily Chart)



Technical Outlook:

Momentum studies are still bullish now 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:
Morning Silver Sell @ 20690/20725 for the target of 20600/20500 with the stoploss at 20790

MCX Silver March: Buy at 20450-480 for the target of 20580, 20700 and 20820 with stop loss at 20300

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