Bullion

Gold futures breached the psychologically important USD900-per-ounce benchmark Friday as participants sought a hedge against inflation and safe haven from falling equities.

· MCX Gold Feb registered a all-time contract high of Rs. 11329 per 10 gram similarly MCX Silver March also pushed up and registered a contract high of Rs. 21015 per kg.

· The metal passed the anticipated level in a reaction to the inflationary implications of a bullish crop report that sparked a grains rally and formed yet another indicator that the long-running commodities boom is racheting up consumer prices.

· After setting a new contract high of USD900.10 an ounce, most-active February gold rose USD4.10 to USD897.70 on the Comex division of the New York Mercantile Exchange. Nearby January gold set a fresh all-time record of USD899.70. Shortly after pit trade closed, the February contract at the Chicago Board of Trade was up USD4.30 to USD897.50.

· The markets will keenly eye theUS economic data to be released next week which includes the Producer Price Index and retail sales on Tuesday, Consumer Price Index and industrial production on Wednesday, housing starts and Philadelphia Fed manufacturing index Thursday andUniversity ofMichigan consumer-sentiment index on Friday

Indian Bullion Spot Market

Spot precious metals finished upbeat tracing the overnight rally in international markets. Gold broke new records on Thursday in international markets on fears of a recession in theUS economy and weak dollar.

Concerns following the dovish statements made by the Federal Reserve chairman, Ben.S.Bernanke on the state of affairs of theUS economy prompted investors to safe haven buying.



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.

Recommendations:

MCX Gold Feb: Sell at 11310-330 for the target of 11260 and 11200 with stop loss at 11355



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.

Recommendations:

MCX Silver March: Sell at 20950-21000 for the target of 20800 and 20650 with stop loss at 21115

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