comex gold intraday

Selling pressure in DGCX Gold
11 June 2008 11:49:23



A sharp recovery in the dollar and continuation of profit booking in oil increased the selling pressure in gold yesterday.



International spot gold traded as low as $864.15 from the intra-day high of $894.65 and last quoted at $866.35 ($891.90).



Dollar extended gains against the major currencies, buoyed by comments from Federal Reserve Chairman Ben Bernanke regarding growing inflation fears, which hinted at a possible rate hike later this year.



A rise in pending home sales also helped the dollar to bounce back. The National Association of Realtors’ April pending home sales index, which is considered as a leading indicator of existing home sales, rose 6.3% in April.



But according to the report by US Commerce Department on Tuesday, the US trade deficit widened 7.8% in April to a seasonally adjusted $60.9 billion from $56.5 billion in March. The growing deficit was driven by a surge in crude oil imports, which eclipsed a significant gain in the nation’s exports.



Dollar had fallen sharply towards the end of last week, after the Bureau of Labor Statistics of the US Labor Department reported a more-than-expected rise in the unemployment rate in May to 5.5%, against the expected 5.1%. The total number of unemployed persons increased by 861,000 to 8.5 million in May, after seasonal adjustment, as per the government's Household Survey Data. However, the non-farm payrolls fell by 49,000.



Also according to the release by US Labor Department last week, initial claims for unemployment benefits in the US fell by 18,000 to 357,000 in the week ended May 31. The four-week average of initial claims also dropped, falling by 2,750 to 368,500. Continuing claims fell by 16,000 in the week ended May 24, dropping to 3.09 million. But the four-week average of continuing claims rose to 3.08 million, up 15,250.



The euro had strengthened after the European Central Bank President Jean-Claude Trichet hinted at a possible future interest-rate hike, amid surging inflation pressures in the euro-zone. According to a preliminary estimate by the statistical agency Eurostat, the consumer inflation hit an annualized pace of 3.6% in May, well above the ECB's target of just below 2%.



Eurostat data early last week had shown a slight upward revision of the first-quarter euro-zone gross domestic product, according to which the economy grew by 0.8% against the previous estimate of 0.7%. Year-on-year growth was unrevised at 2.2%.



The ECB on May 5th chose to leave its key interest rate unchanged at 4 %.



According to the data released by Commerce Department, real gross domestic product of the US increased at a 0.9% annual rate in the first three months of the year, slightly faster than the previous estimate of 0.6%.



The recent data from various sectors in the US have given mixed hints regarding the economy.



Oil prices continued the recoil from record high levels reached last week. Forecasts for lower global oil consumption amid the skyrocketing prices also affected the movement.



The International Energy Agency lowered its forecast for average global oil product demand in 2008 to 86.8 million barrels a day, down 80,000 barrels a day from its previous estimate.



According to the latest energy-outlook report from the US Energy Information Administration, global oil consumption was up a lower than expected 630,000 barrels per day during the first quarter of 2008 compared with year-ago levels, against the expected growth by 1 million barrels a day.



Crude oil July in NYMEX settled at $131.70 ($134.35), after trading in the range $137.98 - $130.80.



Potential supply threats due to geo-political tensions and the Atlantic hurricane season and OPEC’s unwillingness to increase output underpin oil prices.



Last day DGCX Gold Aug traded in the range $894.30 – $867.00 and closed at $869.40 ($895.50).



Weekly Outlook (Spot Gold)



More correction expected below $887. Supports are $881, $875, $864; resistances $900, $908, $917.



DGCX Gold August



TECHNICAL OUTLOOK (Intra-day)

GOLD (Aug) - Bullish above $ 877.00; bearish below $ 872.50

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