Bullion

Profit taking nudged gold and other precious metals lower Friday as crude oil also fell, equities tumbled and the euro pared its early gains

· On MCX, benchmark February gold closed at Rs.10, 902 per 10gm, sliding from a historical high of Rs. 11014 per 10 gram. Benchmark MCX March silver contract closed at Rs.19,967, falling from a recent weekly high of Rs. 20175 per kg.

· Dow Jones finished down by 256.54 points and FTSE by 130.9 points. After touching the $100 mark on Thursday, crude oil retreated below $98 per barrel on Friday.

· The underlying statement, however continues to remain upbeat in precious metals. Negative US economic data renewed concerns of a slowing US economy. As per government reports, US unemployment rate stood at 5%, the highest in two years. In December the number of jobs added were a meager 18,000 as against a forecast of 70,000.

MCX Gold Feb (Daily Chart)

Technical Outlook:

Momentum studies are still bullish but are now at overbought levels and will tend to support reversal action if it occurs. The daily stochastics have crossed over up which is a bullish indication. The stochastics 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 moving average. The downside closing price reversal on the daily chart is somewhat negative. The 9-day RSI over 70 indicates the market is approaching overbought levels. It is a mildly bearish indicator.

Recommendations:

MCX Gold Feb: sell at 10950-980 for the target of 10880 and 10820 with stop loss at 11020

MCX Silver Mar (Daily Chart)



Technical Outlook:

Momentum studies are still bullish but are now at overbought levels and will tend to support reversal action if it occurs. The daily stochastics have crossed over up which is a bullish indication. The stochastics 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 moving average. The downside closing price reversal on the daily chart is somewhat negative. The 9-day RSI over 70 indicates the market is approaching overbought levels. It is a mildly bearish indicator.

Recommendations:

MCX Silver March: sell at 19940-920 for the target of 19850 and 19700 with stop loss at 20050

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