Bullion

Precious metals hovered close to Friday's record highs Monday as the dollar lost ground to the euro, and with the prospects of a rate cut Wednesday underpinning prices.

· MCX Gold Feb registered days high near 11740 was trading with a gain of Rs. 220 per 10 gram; similarly MCX silver March was trading higher following the yellow metal, registered days high at Rs. 20460 per kg with a gain of Rs. 300 per kg.

· International Spot gold traded at $929 per toz and silver gained almost 122 cent and traded at $16.69 per toz.

· Speculation of another Federal Reserve rate cut at the Federal Open Market Committee meeting Wednesday.

· Production at South African gold and platinum mines remains halted Monday due to electricity cuts, although market participants are expecting some guidance from the national power producer Eskom from Tuesday. In light of reduced South African platinum production, UBS has raised its one- and three-month platinum price forecast to USD1800/oz.

· New home sales were down 4.7% from November's pace and much weaker than expected. For all of 2007, new home sales were down 26%.

· The cost of borrowing gold for one year is 0.4248 percent, compared with an average of 0.26917 percent in the past 12 months, according to data compiled by Bloomberg. Rates reflect forecasts about the amount of metal available for borrowing.

Indian Bullion Spot Market

Precious metals almost steady in spot markets. The yellow metal, however was underpinned by expectations of yet another interest rate cut by the Federal Reserve. Meanwhile the dollar also traded weak against the euro.

· In Mumbai markets, gold (995) finished at Rs11,710/10gm and gold (999) at Rs.11,760/10g. Arrivals in gold were at 150 kilos. Silver (.999) closed at Rs.20,880/kg. Arrivals were in silver were at 250 kilos.

· Chennai gold (995) finished at Rs11,700/10gm and gold (999) at Rs.11,800/10gm respectively whereas Silver (.999) closed at Rs.20,450/kg, rising by Rs.950.

· Jaipur gold standard closed at Rs.11,800/10gm whereas Silver (.999) closed at Rs.20,900/kg.

· Ahmedabad gold (995) closed at Rs.11,700/10gm and gold (999) at Rs11,750/10gm whereas Silver (.999) closed at Rs.20,900/kg.

· In Delhi bullion markets, gold (995) closed at Rs.11,750/10gm and gold (999) closed at Rs.11,800/10gm whereas Silver (.999) ends at Rs.20,540/kg.

MCX Gold Apr (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:

MCX Gold April: Sell at 11740-750 for the target of 11690 and 11640 with stop loss at 11775

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:

MCX Silver March: Sell at 21450-480 for the target of 21300 and 21170 with stop loss at 21560

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