comex gold outlook

DGCX Gold : Closes lower; volatility continues
13 June 2008 12:48:47



The see-saw movement in gold prices that has been characteristic for this week continued, as the bullion market witnessed heavy selling yesterday. The US Dollar bounced back offsetting Wednesday’s losses, supported by an unexpected rise in US Retail sales.



International spot gold plunged to a low of $856.80 and last quoted at $867.90 ($879.55).



The Commerce Department reported a 1 % rise in May retail sales, the biggest increase recorded since November, letting the US currency to add to this week’s sharp gains.



Early this week, comments from Federal Reserve Chairman Ben Bernanke regarding growing inflation fears, which hinted at a possible rate hike later this year, had lifted the dollar against the major currencies.



A rise in pending home sales had also supported the dollar. 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 report from the Labor Department highlighted the pressures on the US job market. According to the report, initial jobless claims in the US increased by 25,000 to 384,000 in the week ending June 7. The four-week average of initial claims rose 2,500 from the prior week to 371,500. Continuing unemployment claims also recorded a rise of 58,000, to 3.14 million for the week ending May 31, the highest level in more than four years. The four-week average of continuing claims rose by 16,500 to 3.09 million in the latest week.

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



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.



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.



Last day DGCX Gold Aug traded in the range $878.90 – $859.20 and closed at $873.20 ($884.40).




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 $ 873.50; bearish below $ 868.40


MCXARUN
9994500540