bullion intraday

Bullion
20 May 2008 11:44:01



Major Headlines:

Spot gold climbed as high as$914.40 an ounce in New York Monday morning, its highest intraday level since April 22. The dollar remains a currency facing substantial headwinds in the form of the huge annual trade, current and now increasing budget deficits and burgeoning stagflation



Gold extended gains to hit its highest level in nearly a month above $900 an ounce on the back of speculative buying as oil held near record high, raising fears of inflation.



Previous attempts to revisit the record high have been met by heavy profit taking, which saw gold fall to a four-month low at $845 an ounce in early May. Whether gold will hold above $900 is a difficult question. Around about $920 should be the psychological resistance for the metal,



Gold rose to the highest in three weeks as surging energy costs boosted demand for the precious metal as a hedge against inflation. Silver dropped. Crude-oil futures approached the record high from May 16 before erasing gains. The surge in oil spurred a 3.3 percent gain in the Reuters/Jefferies CRB Index of 19 commodities this month. Gold is still down 13 percent from $1,033.90 an ounce, the highest ever, on March 17, when oil reached a previous peak



Platinum supplies will fall short of consumption for a second year in 2008 as increased demand from automakers, the biggest user, outpaces mine output from South Africa, the largest producer



Last year's deficit was 480,000 ounces, the largest since 2002, as auto use gained 8.2 percent and global supply fell to the lowest in three years, The metal rose to a record $2,301.50 an ounce in March and may trade at $1,775 to $2,500 in six months with a ``substantial deficit'' for the year



It might be a surprise that platinum jewelry demand held up as well as it did, China, which accounts for 49 percent of platinum jewelry demand, used 2.6 percent more, and gains in the U.K. and Switzerland spurred a 7.7 percent increase in Europe and the Platinum has gained 42 percent this year, outpacing gold's 8.8 percent advance and silver's 16 percent increase.


Supplies of silver will exceed demand from jewelers and other manufacturers by 2,691 metric tons, the highest in more than 20 years, Including investor demand and reduced sales of hedged production by miners, the surplus will be 541 tons compared with a deficit of 1,345 tons last year



Sino Gold Mining Ltd., owner of China's second-largest gold mine, said operations at the Jinfeng mine weren't affected by last week's earthquake in neighboring Sichuan province that killed more than 30,000 people. Sino Gold started output from Jinfeng in southern Guizhou province last year and has forecast output of as much as 160,000 ounces this year.



U.S.Economy:

The Conference Board's index of leading indicators was up .1% in April, a little better than expected. Six of the ten indicators showed positive gains

U.S. food prices may jump 5.5 percent this year, more than a previous forecast of 5 percent, according to the U.S. Department of Agriculture. Fats and oils may increase 11.5 percent, egg prices may climb 11 percent, and baked products could rise 8.5 percent

Currencies update:

The ECB has refrained from following the U.S. Federal Reserve and Bank of England in lowering interest rates to shore up growth after a global increase in borrowing costs dimmed the outlook. The bank says Europe's economy is sound and inflation remains a bigger concern. While euro-region inflation slowed to 3.3 percent in April from a 16-year high of 3.6 percent in March, it's still above the ECB's 2 percent limit.

Construction output in the Euro area 15 was down 2.2% in March and down 1.4% from a year ago.

INR trading is closed yesterday due to bank Holiday

MCX Gold June (Daily Chart)








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 12265 Target 12335 and 12410 Stoploss at 12220

MCX Silver July (Daily Chart)







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 23360 Target 23490 and 23650 Stop loss at 23240


MCXARUN
9994500540