MCX Gold trades towards a weekly highs

Gold rose to a one-week high on speculation that surging costs of raw materials will boost demand for the precious metal as a hedge against inflation. Silver also gained.

Gold has had a correlation of 0.70 against the euro-dollar exchange rate this year, compared with 0.58 last year, Bloomberg data show. A figure of 1 would mean the two move in lockstep. The dollar slid to a one-week low versus the euro on speculation a report today will show a contraction in U.S. manufacturing, encouraging the Federal Reserve to delay raising interest rates.

Spot gold traded sideways to upside, struggling to find a direction amid uncertainty over the dollar's short-term prospects, The dollar weakened as weak quarterly performances from Wall Street banks have refocused the market's attention on the impact of the credit crisis on the U.S. economy.

South Africa, the biggest precious metals producer, said mining output fell 2 percent in April. Gold production dropped 10.1 percent from a year earlier, Pretoria-based Statistics South Africa, the national statistics agency, Non-gold output fell 0.7 percent.

Russia's foreign currency and gold reserves, the world's third largest, rose to a record $551.5 billion last week, The value of reserves increased by $2.4 billion in the week
ended June 13, Moscow-based Bank Rossii, the central bank, the reserves gained $500 million in the previous week.

India's largest commodity exchange, the Multi Commodity Exchange, will launch platinum futures on Today; MCX will launch September and December contracts with Mumbai as the delivery center.

Gold imports by India, the world's largest consumer of the metal, fell 52% in May to 32.9 metric tons; the country imported around 107.9 tons of gold during the first five months of the year compared with 300 tons a year ago. As for silver, the country imported around 24 tons duty-free in May, the first time since December.

U.S.Economy:

The Conference Board's index of leading indicators was up .1% in May, a little better than expected.

The Philadelphia Federal Reserve's regional index of manufacturing fell from -15.6 to -17.1 in June, weaker than expected.

The U.S. Labor Department said that jobless claims were down 5,000 last week to 381,000, a little more than expected.

Currencies update:

Inflation appears to be rising everywhere. Statistics Canada said that consumer prices were up 1.0% in May and up 2.2% from a year ago, more than expected. The core index of prices was up 1.5% in May from a year ago. Also, wholesale sales were up 1.4% in April. The September Canadian dollar is steady to higher.

The U.K.'s Office for National Statistics said that retail sales were up 3.5% in May, much stronger than expected and the biggest jump in 20 years.


MCX Gold June - 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.

Technicals have turned neutral to bullish and market is expected to remain positive above 12649 levels. If sustain above this level can see a rally towards 12769 and 12927 If market sustains below 12491 can see a further fall towards 12371 and 12213


Recommendations–MCX Gold Aug: Buy at 12435 Target 12570 and 12740 Stoploss at 12385

MCX Silver July - 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.

Technical have turned neutral to bullish and market is expected to remain positive above 24790 levels. If sustain above this level can see a rally towards 25078 and 25347 If market sustains below 24390 can see a further fall towards 24171 and 23802

Recommendations-MCX Silver July: Buy at 24240 Target 24480 and 24790 stoploss at 24080


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