bullion intraday

Bullion
04 June 2008 10:55:03

Bullion June 04 2008

Major Headlines:

Gold fell as Federal Reserve Chairman Ben S. Bernanke signaled he's finished cutting U.S. borrowing costs rates for now, boosting the dollar and eroding the appeal of precious metals as alternative investments.

The U.S. Dollar Index, a weighted measure against the euro, yen and four other major
currencies, rose as much as 0.8 percent. In March, the dollar's plunge to a record helped send gold to the highest ever.

Gold, which investors use as a hedge against U.S. dollar weakness, is lower due to indications that the U.S. Fed may be done lowering official interest rates, which is positive for the dollar, and shift focus to tackling inflation. However, the Fed is unlikely to raise rates until housing prices stabilize

Bernanke also indicated that the Fed's current rate stance is "well positioned" to promote moderate growth and low inflation and that the Fed will monitor foreign exchange markets to ensure that the dollar remains a "strong and stable" currency.

Importantly, gold traders will continue to closely monitor the crude oil market and the value of the U.S. dollar versus the other major currencies. Weaker crude oil prices and a firmer greenback would put strong downside price pressure on the precious yellow metal. Any resumption of dollar weakness or crude oil strength would bolster the gold bulls to a degree. However, gold bulls are worried that gold prices have been trending lower for 2 1/2 months while during this time frame crude oil prices have hit all-time highs

Gold production in South African slumped by almost 16% during the first quarter of the year as mines were first shut down by a power shortage and then had to operate with reduced electricity supplies, Output for the three months amounted to 1.68 million troy ounces, or 52,228 kilograms, compared with about 1.99 million ounces in the previous quarter, On a Year-on-year basis, production was almost 17% lower, the Chamber of Mines said.

U.S.Economy:

Federal Reserve Chairman Bernanke told an international monetary conference in Spain that further rate cuts were not likely because of rising inflation. He expects the U.S. economy to improve in the second half of 2008 and into 2009.

The U.S. Commerce Department said that factory orders were up 1.1% in April, much stronger than expected. Durable goods orders, however, were down .6% in April.



Currencies update:

Eurostat said that real GDP in the Euro area 15 was up .8% in the first quarter and up 2.2% from a year ago, up slightly from an earlier estimate. Also, an index of industrial producer prices was up 6.1% in April from a year ago, the most in seven years.

The Reserve Bank of Australia kept its interest rate unchanged at 7.25%, as expected. The June Australian dollar is steady.

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 12048 If market breaches below 12048 may see prices to take further correction towards 11926 and 11782 However if it holds back above 12260 may see prices to rise further on today. Major resistance is seen at 12358 and 12480

Recommendations–MCX Gold June: Sell at 12200 Target 12130 and 12050 Stoploss at 12260

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 23027 If market breaches below 23027 may see prices to take further correction towards 22713 and 22427 However if it holds back above 23627 may see prices to rise further on today. Major resistance is seen at 23913 and 24227

Recommendations-MCX Silver July: Sell at 23410 Target 24210 and 22950 stoploss at 23555


MCXARUN
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