comex gold outlook

Gold prices resurfaced above $950 a Troy ounce, as the Dollar switched back to the selling mode. Recovery in oil prices also fuelled the bullion’s progress.



International spot gold traded in the range $934.30 - $954.20, and last quoted at $953.50 ($938.30).



Dollar extended losses after the release of fresh economic data added more pressure. On the other hand, the European currency was upbeat following robust data from the Euro-zone’s two biggest economies.



Germany's Ifo institute reported that business confidence in the Europe's biggest economy rose for a third consecutive month. Also, French business sentiment rose unexpectedly in March, reaching its highest level so far this year, according to national statistics office INSEE.



The US Commerce Department reported yesterday that sales of new homes in the US fell to a 13-year low in February, dropping 1.3% to a seasonally adjusted annual rate of 590,000.



US consumer confidence index had fallen in March to 64.5 from a revised reading of 76.4 in February, according to a US Conference Board release on Tuesday.



But the report from National Association of Realtors released on Monday had shown that resale of homes rose 2.9% to a seasonally adjusted annualized rate of 5.03 million. The rise was above expectations, and the first in seven months.



Gold had corrected from record high levels reached earlier last week, along with oil, as the Dollar bounced back moderately from record-low levels versus the Euro after the Federal Reserve cut its benchmark interest rate by 75 basis points to 2.25 percent.



The latest rate cut has been the sixth since last September, and has made the reduction in the federal funds rate to 300 basis points, to the lowest point since late 2004. But many market participants and analysts had anticipated an even more severe cut by the Fed, a full 100 basis points, amid serious concerns regarding a recession in US economy.



Crude oil for May delivery in NYMEX settled at $106.21 ($101.22) a barrel, after trading in the range $101.43 - $106.36.



The weekly update by US Energy Department’s Energy Information Administration said US crude stockpiles remained unchanged at 311.8 million barrels in the week ended March 21, while a rise of around 1.5 million barrels had been widely expected.



The Commerce Department had reported last week a drop in US housing starts in February by 0.6 percent to a 1.065 million unit annual rate, down from 1.071 million units in January.



The economic worries and a nose-diving dollar had propelled spot gold to record an all-time high of $1030.80 a Troy ounce last week.



The Federal Reserve in a an unexpected move had cut its discount rate for direct loans to banks by 0.25 percent point to 3.25 percent, and launched a new discount window facility for primary dealers, in desperate moves to stabilize financial markets.



The emergency moves by Fed boosted speculations regarding the possibilities for more casualties in the widening US financial crisis.



Meanwhile, the US Commerce Department reported that the US trade deficit widened slightly in January, up 0.6% to $58.2 billion.



Medium term outlook (Spot Gold)

Bullish above $916; Resistances are $926, $932, $947, $954, $973, $984, $995, $1002, $1022, $1035, $1052; supports $896, $883. Further up-trend is expected above $954.60.



Last day DGCX Gold June traded in the range $939.30 – $956.90 and closed at $955.20 ($941.90).



DGCX Gold June

TECHNICAL OUTLOOK (Intra-day)

GOLD (June) - Bullish above $ 954; bearish below $ 949

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