bullion intraday

Bullion
16 May 2008 09:44:37



Indian spot gold edged higher on Thursday, as the rupee plunged to a 13-month low against the U.S. dollar, heightening the precious metal's appeal as an alternative investment. A weak dollar was balanced by a return of risk appetite to the equity market and continued subdued buying from jewellers. Although demand is expected to ease over the summer months

India's rupee fell to a 13-month low on concern near-record oil prices will boost the nation's import bill, widening the trade and current account deficits


Gold rose as the dollar's rally stalled and energy costs climbed, boosting the appeal of the precious metal as a hedge against inflation. Silver also gained.


The dollar fell against a weighted basket of the euro, yen, pound and three other major currencies, and crude-oil prices rose as much as 1.4 percent. Gold is still down 15 percent from a record $1,033.90 an ounce on March 17, when crude oil and the euro set previous highs.



Gold has had a correlation of 0.67 to the euro-dollar exchange rate this year, up from 0.58 last year, Bloomberg data show. A figure of 1 would mean the two move in lockstep. The euro climbed for the first time in three days after the German economy grew at the fastest pace in 12 years, reducing the likelihood that the European Central Bank will lower interest rates.



Russia's foreign currency and gold reserves, the world's third largest, rose to a record $536.8 billion, the central bank said. The value of reserves increased by $2.9 billion in the week ended May 9, Moscow-based Bank Rossii, the central bank, said, The reserves rose $4.4 billion in the previous week.



U.S.Economy:

The Federal Reserve said that industrial production was down .7% in April, weaker than expected, after a .2% gain in March. The March Eurodollars are trading higher.

The U.S. Labor Department said that jobless claims were up 6,000 last week to 371,000, roughly as expected.

The Federal Reserve of Philadelphia's regional index of manufacturing improved from -24.9 to -15.6 in May, better than expected.

The Federal Reserve of New York's regional index of manufacturing fell from +.63 to -3.23 in May, weaker than expected.

Currencies update:

The U.K.'s Office for National Statistics said that housing starts totaled 32,100 units in the first quarter of 2008, down 24% from a year ago.

Japan's Cabinet Office said that core machinery orders were down 8.3% in March, weaker than expected.

The dollar fell against the yen as reports showed U.S. industrial production fell in April more than twice as much as forecast and New York manufacturing unexpectedly contracted this month.

The euro strengthened as Europe's economy grew more than expected in the first quarter, increasing the likelihood the European Central Bank will hold interest rates at a six-year high. Canada's dollar rose to near an eight-week high against the greenback as crude oil prices surged.

MCX Gold June

Technical Outlook:The daily stochastic have crossed over up which is a bullish indication. The stochastic 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 EMA. The downside closing price reversal on the daily chart is somewhat negative.

Market is expected to remain positive and the resistance is seen at 12196 levels. If market breaches 12196 may see prices to take further upside towards 12362 and 12569however if it holds back below 11823 may see prices to fall further on today. Major support is seen at 11616 and 11450

Recommendations–MCX Gold June: Buy at 11920 Target 11980 and 12050 Stoploss at 11870



MCX Silver July

Technical Outlook: The daily stochastic have crossed over up which is a bullish indication. The stochastic 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 EMA. The downside closing price reversal on the daily chart is somewhat negative.

Market is expected to remain positive and the resistance is seen at 23482 levels. If market breaches23482 may see prices to take further upside towards 23843 and 24167however if it holds back below 22797 may see prices to fall further on today. Major support is seen at 22473 and 22112

Recommendations-MCX Silver July: Buy at 22660 Target 22780 and 22850 Stop loss at 22520

MCXARTUN
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