Metals & Energy Outlook

Gold prices bounced back on Friday along with oil prices. Persistent US economic concerns supported the bullion’s recovery from early losses, but a stronger dollar limited the gains.



International spot gold traded in the range $870.10 - $888.20 and last quoted at $884.20 ($876.20).



The US President Bush called Friday for a ‘stimulus package’ of roughly $145 billion in tax relief for individuals and businesses, in an attempt to boost the economy.



Monday is a public holiday in the United States on account of Martin Luther King Day, observed to honour the American civil rights leader who led non-violent protests in opposition to segregation and discrimination against Black Americans.



Latest data from the US Labor market provided some support for the dollar, though Housing data and comments by the Fed Chairman suggesting a worsened outlook for the economy dampened the sentiments.



According to the weekly update by US Labor department on Thursday, the seasonally adjusted number of people filing initial claims for state unemployment benefits fell by 21,000 to 3,01,000 in the week ended Jan 12, the third consecutive weekly decline. The four-week average of new claims fell by 11,750 to 3,28,500.

However, the four week moving average for continuing claims rose 28,250 to 2.726 million, the highest level since November 2005.

The Commerce Department had reported that construction on new homes fell 14% in December to a seasonally adjusted annual rate of 1.01 million, the slowest building pace in more than 16 years.

Slightly more upbeat view of the US economy had helped the greenback to recover in the previous day. The Federal Reserve in its Beige Book, the summary of commentary on current economic conditions, had reported Wednesday that the US economy grew at a modest pace in most regions of the nation in late November and December.



However, the growing expectation of investors for further interest rate cuts in the US and persistent fears regarding the US economic outlook has kept the greenback vulnerable. Comments from the Fed chairman Ben Bernanke have reinforced the expectations for tight monetary measures by the Central Bank.



Medium-term Outlook (Spot Gold)

Gold prices are expected to trade within the range $837 - $770. Breaking of either level may decide the direction. $801 may act as the major resistance followed by $824, $836, $850, $863, 872, $887, $900, $912, $915.40, $926. Supports are $754 and $744.



Crude oil February in NYMEX traded in the range $89.61 - $91.32 and closed at $90.57 ($90.13).



Crude oil prices had fallen for continuous days during the week, weighed down by rise in inventories and fears of a slowdown in demand amid concerns regarding the economy of the largest energy consumer, the US.



The US Energy Information Administration reported Wednesday US crude inventories rose for the first time in nine weeks, up by 4.3 million barrels to 287.1 million barrels in the week ending Jan 11.



Last day, MCX Gold February closed at 11186, after trading in the range 11204 – 11175.



MCX Copper February traded in the range 282.60 – 282.00 and closed at 282.35.


Technicals – MCX (Intra day calls)



CRUDE OIL (February) BULLISH ABOVE 3548 BEARISH BELOW 3533



GOLD (February) BULLISH ABOVE 11208 BEARISH BELOW 11168



SILVER (March) BULLISH ABOVE 20941 BEARISH BELOW 20855

COPPER (February) BULLISH ABOVE 282.70 BEARISH BELOW 281.90



LEAD (January) BULLISH ABOVE 102.50 BEARISH BELOW 102.10



NICKEL (January) BULLISH ABOVE 1117 BEARISH BELOW 1113



ZINC (January) BULLISH ABOVE 92.70 BEARISH BELOW 92.30

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