Comex gold tecnical

Gold prices retreated on profit booking yesterday, as the Dollar rebounded 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.



International spot gold traded in the range $1012.30 - $977.80 and last quoted at $981.50 ($1002.30).



Flurry of gloomy economic data from the US continued, as the Commerce Department on Tuesday reported 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 on Monday.



In the meantime US Labor Department’s Producer Price Index, which measures inflation pressures before they reach the consumer, rose 0.3 percent in February following a 1.0 increase in January.



The Federal Reserve in a an unexpected move on Sunday night 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.



Adding to the pressure on the greenback, data from the US showed total industrial output fell 0.5 percent in February, much steeper than the expected rate of 0.1 percent.



Another release showed US homebuilders' confidence held steady in March. The National Association of Home Builders (NAHB) Housing Market Index for March remained unchanged at 20.



The University of Michigan/Reuters index tracking consumer sentiment had dipped to 70.5 in March from 70.8 in February.



The US Labor Department said on Friday the consumer price index was flat in February against the expectations of a 0.2 % increase.



The US Commerce department reported a worse-than-expected 0.6 percent fall in the Retail Sales in February.



Another release by the US Labor Department showed the initial claims for state unemployment benefits remained unchanged at 353,000 in the week ended March 8. The four-week average of initial claims fell slightly in the latest week, down by 1,250 to 358,500.



The Federal Reserve had announced new steps to boost liquidity in the banking system.



The Fed said it would increase the size of its emergency auctions by $40 billion, which means providing $100 billion to primary dealers in US Treasury debt. It also would start a series of term repurchase transactions with the primary dealers that trade securities directly with the Fed, expected to be worth a total of $100 billion.



Meanwhile, the US Commerce Department reported on Tuesday 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 April traded in the range $1012.30 – $997.80 and closed at $988.10 ($1006.70).



DGCX Gold April



TECHNICAL OUTLOOK (Intra-day)



GOLD (April) - Bullish above $ 996; bearish below $ 991

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