bullion intraday

Bullion
29 May 2008 10:25:46



Bullion May 29 2008

Major Headlines:

Gold fell in New York for a second straight day as the dollar strengthened, reducing the appeal of the precious metal as an alternative investment and Silver gained, before this week, gold had gained 40 percent in the past year as oil doubled, touching an all-time high of $135.09 a barrel last week

The dollar rose broadly on Wednesday after a report showed new orders for US durable goods fell by less than expected in April, supporting the view the Federal Reserve may keep interest rates on hold or even raise them by the end of the year

China, which may overtake South Africa as the world's largest gold producer, has discovered five major bullion deposits, the China Gold Association said. China's demand for gold jumped 23 percent in 2007, making it the world's second-largest consumer, as a booming economy spurs jewelry purchases.

Bullion soared to a record $1,032.70 an ounce on March 17, as a falling U.S. dollar and declining equities led investors to buy alternative assets. China’s total gold resource is between 15,000 and 20,000 tons, the association said today. Production of the bullion in the first two months of the year was 38.2 tons, the association also said, without giving a comparison from a year earlier

There is some long liquidation in gold. "Certainly a part of it is fund activity and speculators." Gold futures dipped below $900, as psychologically important. The next key area is the $880s, and more specifically $886 for the June contract

The short-term sentiment was weak because of the softer euro and prices could come under selling pressure as trading in Europe gets underway. The metal could Retrace down toward support at $880/oz and the the weakness will likely prove temporary, and gold's longer-term outlook is still positive, given concerns about inflationary pressures and still-shaky outlook for the dollar,



U.S.Economy:

The U.S. Commerce Department said that durable goods orders were down .5% in April, better than expected. Excluding transportation, orders were up 2.5%, also better than expected. The June U.S. T-bonds are trading lower.


The Mortgage Bankers' Association said that its index of mortgage applications was down 4.6% last week.

Currencies update:

In Germany, annual inflation in three states topped 3% in May, highlighting upside risks to the reading for the euro zone’s biggest economy, due later on Wednesday. The data supported expectations for the European Central Bank to retain its hawkish, inflation-fighting stance despite signs of an economic slowdown seen in recent sentiment surveys from euro zone member states.

The dollar rose for a third day against a weighted basket of six currencies, including the euro and the yen. Record energy costs have fueled speculation the Federal Reserve will raise borrowing costs to control inflation.

The Australian dollar's rally against the U.S. currency stalled after a slump in the price of gold, the country's third-most valuable export. The New Zealand dollar snapped an eight-day gain.

MCX Gold June Technical Outlook:

The daily stochastic have crossed over down which is a bearish indication. The stochastic indicators are decreasing from overbought level, which is bearish and should support lower prices. The market's short-term trend is negative as the close remains below the 9-day EMA. The upside closing price reversal on the daily chart is somewhat positive.

Market is expected to remain negative and the support is seen at 12262 If market breaches below 12262 may see prices to take further correction towards 12110 and 11959 However if it holds back above 12565 may see prices to rise further on today. Major resistance is seen at 12716 and 12868

Recommendations–MCX Gold June: Sell at 12485 Target 12350 and 12230 Stoploss at 12540

MCX Silver July Technical Outlook:

The daily stochastic have crossed over down which is a bearish indication. The stochastic indicators are decreasing from overbought level, which is bearish and should support lower prices. The market's short-term trend is negative as the close remains below the 9-day EMA. The upside closing price reversal on the daily chart is somewhat positive.

Market is expected to remain negative and the support is seen at 23792 If market breaches below 23792 may see prices to take further correction towards 23333 and 22992 However if it holds back above 24592 may see prices to rise further on today. Major resistance is seen at 24933 and 25392

Recommendations-MCX Silver July: Sell at 24410 Target 24250 and 23970 stoploss at 24595

MCXARUN
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