comex gold outlook

DGCX Gold Outlook July 10, 2008
10 July 2008 11:47:24



Gold pared some of the early week losses and closed moderately higher yesterday as the dollar weakened against the major currencies. Safe haven appeal of the bullion was also boosted by Iran’s test firing of missiles yesterday, escalating tensions in the Middle East.

International spot gold traded in the range $915.60 - $928.75 and last quoted at $927.75 ($919.50).

Iran test-fired nine missiles on Wednesday, including a new long-range missile capable of striking Israel.

Weak pending home sales data from the US released on Tuesday also weighed on the greenback. The National Association of Realtors' seasonally adjusted index of pending sales for existing homes fell 4.7% to 84.7 from an upwardly revised April reading of 88.9.

The dollar had firmed against major currencies on Tuesday, finding support in comments from Federal Reserve Chairman Ben Bernanke, who said the Fed may extend its lending facilities for troubled financial institutions into next year.

In a widely expected decision, the European Central Bank had raised its key interest rate by 25 basis points to 4.25 percent last week.

The unemployment rate in US remained at a four-year high of 5.5% in June, according to the release by the Labor Department. At the same time, US payrolls in June fell by 62,000. The payrolls have now declined in all six months this year for a total job loss of 438,000.

Indicating better-than-expected manufacturing activity in the US, the Institute for Supply Management’s factory index rose to 50.2% in June from 49.6% in May.

The National Association of Realtors had reported that sales of existing single-family homes and condominiums edged up by 2 percent to a seasonally adjusted annual rate of 4.99 million units in May.

But the sale of new US single-family homes tumbled 2.5% in May to a seasonally adjusted annual rate of 512,000, according to the Commerce Department. Compared with a year earlier, the new-home sales were down 40.3%.

Meanwhile, the US Commerce Department in its final revision to GDP estimates said last week that the economy grew at a slightly faster pace in the first quarter than originally reported. Real GDP was revised to a 1.0% annual rate in the first three months of the year, up from an originally reported reading of 0.9%.

The US Consumer Confidence fell in June to a 16-year low. According to Conference Board, June consumer confidence index fell to 50.4 from a reading of 58.1 in May.

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. The growing deficit was driven by a surge in crude oil imports, which eclipsed a significant gain in the nation’s exports.

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

Official data that showed a 10.1 percent decrease in South Africa’s gold production in April 2008, compared to the corresponding month in the previous year, supported the bullion.

Oil prices failed to hold on to early-day gains amid volatility. In the G8 summit, leaders had warned that soaring oil and food prices pose a serious challenge to stable worldwide economic growth.

Weekly Outlook (Spot Gold)

Expecting weakness below $925. Supports are $918, $906, $885; resistances $936, $947, $955.

Last day DGCX Gold Aug traded in the range $918.50 – $930.30 and closed at $928.70 ($922.40).

TECHNICAL OUTLOOK (Intra-day)

GOLD (Aug) - Bullish above $ 929; bearish below $ 924

MCXARUN