Gold rebounded and silver jumped the most in three months

Gold rebounded and silver jumped the most in three months as the euro climbed against the dollar, boosting the appeal of the precious metals. Gold often moves in tandem with the euro, which rose as much as 0.9 percent.The euro is near the bottom of its recent range and any sharp rebound toward the top of the range could help gold's direction. Gold futures for August delivery rose $22, or 2.5 percent, to $895 an ounce in Comex. Gold have declined 2.9 percent last week. Silver futures for July delivery jumped 88 cents, or 5.2 percent, to $17.44 an ounce.

The dollar fell against the euro after a report showed NewYork state manufacturing contracted in June, reducing the chances the Federal Reserve would raise interest rates to damp inflation. The euro traded as high as $1.5518.

Gold has gained 6.8 percent this year and crude oil 44 percent. G8 finance ministers said over the weekend that surging food and fuel prices have replaced the credit squeeze as the biggest threat to the world economy. The inflation rate in the euro area has risen to 3.7 percent, the highest since 1992.

The predominant concern is the inflationary effect that oil in particular and also food prices are having,'' U.K. Chancellor of the Exchequer Alistair Darling said June 14 after the G8 talks ended in Osaka, Japan. U.S. consumer prices advanced 0.6 percent in May, the most since November and faster than forecast, the Labor Department said June 13.

Speculative long positions, or bets prices will rise, outnumbered short positions by 151,248 contracts, the Washington- based commission said in its Commitments of Traders report. The net-long position was last this low in May and Gold rose from $864 the following day to $932.55 on May 21. The composition of the net long position is different, with fewer gross longs and crucially, fewer gross shorts. The reduction in the gross longs may be a further sign that gold is losing its attraction.


Currencies update:

Currency forecasters are betting that the dollar rally is just getting started as the Federal Reserve's shift to fighting inflation makes it likely to raise interest rates more aggressively than the European Central Bank. The currency will strengthen 2.5 percent to $1.50 per euro by year-end, according to the mean estimate of 39 firms surveyed by Bloomberg.

Economists anticipate that the ECB will raise rates a quarter-percentage point by September and then cut borrowing costs by yearend. Fed Chairman Ben S. Bernanke, who said he's ``attentive'' to the U.S. currency, will boost rates three-quarters of a percentage point by the end of the third quarter of 2009, according to data compiled by Bloomberg.


MCX Gold August

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 12360 levels. If market breaches 12360 may see prices to take further upside towards 12430 and 12560 however if it holds back below 12360 may see prices to fall further on today. Major support is seen at 12270 and 12189


Recommendations–MCX Gold August: Sell at 12360 Target 12277,12210 Stoploss at 12460

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 positive and the resistance is seen at 24650 levels. If market breaches 24660 may see prices to take further upside towards 24850 and 25100 however if it holds back below 24600 may see prices to fall further on today. Major support is seen at 24400and 24200

Recommendations-MCX Silver July: Sell at 24660 Target 24430 and 24200 Stop loss at 24845


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