gold outlook

MAJOR HIGHLIGHTS

Gold assets held in exchange-traded funds managed by ETF Securities Ltd. rose to 1.708 million ounces, from 1.615 million on Dec. 2, the Jersey, Channel Islands-based company said yesterday.

The US Federal Reserve meets on Dec. 16 to decide on further rate cut the world’s largest economy in recession.

MARKET RECAP

Last week, Spot gold fell sharply losing almost $63 over the week as selling pressure was witnessed at higher levels. The dollar continued to strengthen during the week whereas crude prices continued to make multi-year lows, both leading to a sell-off in bullion prices. Also, with the global equities markets still suffering from bearish sentiments and negative news, sell-off across various asset classes can still be seen across the world. Last week, the Bank of England (BOE) dropped its key lending rate by a full percentage point to 2%, the lowest level for the benchmark since 1939. The European Central Bank (ECB) also slashed its key lending rate by three-quarters of a percentage point to 2.5%. The cut is the largest in the ECB's 10-year history.

In currency market, the Euro trading sideways for the week with short-term support level of 1.2540 whereas resistance is seen at 1.2870. The overall trend still remains sideways-down unless we see a close above 1.2842 and consistent trading above the same. The low of 1.2328 made on 28th October shall continue to act as a very strong support.

OUTLOOK

The overall trend remains down for Gold as the $ is still going strong. Also, inflationary pressures have eased considerably with the sharp fall in crude prices. While the dollar has been the beneficiary of bigger-than-expected rate cuts in Europe, last week’s U.S. jobs data (Nonfarm Payrolls) could pressurize the dollar with the focus now shifting back toward the U.S. economic numbers. Also, a 50 basis point rate cut by the US Fed is currently being expected by market participants in the next week.

Deflation continues to be the key macro development to watch, as gold’s attraction has been waning. The movement in gold prices is presently being driven primarily by the Dollar direction. The Dollar Index has resistance at 87.40 & support at 85.60 for the day. Currency & crude shall continue to play an important role in impacting bullion prices in coming days.

On intraday basis, Spot Gold prices have immediate support at $772/$782 whereas resistance is seen at $760/$752. Spot Silver prices shall find support at $9.58/$9.30 whereas resistance is seen at $9.80/$10.00.

MCX Feb Gold has support at 12100/11950 whereas resistance is seen at 12260/12390 levels whereas MCX March Silver shall find support at 16550/16270 whereas resistance is seen at 16820/16980 levels.


MCXARUN
9994500540