Bullion intraday

Gold was little changed near a three- week high in Asia after crude oil reached a record yesterday, boosting the appeal of bullion as a hedge against inflation.

· MCX Gold rose to a high of Rs. 11979 per 10 gram and MCX Silver march tested a high of Rs. 22714 per kg. International spot gold traded as high as $ 945.20 and last quoted at $944.50.

· Gold will continue to benefit from gains in other commodities such as base metals and agricultural commodities, as demand for a hedge against accelerating consumer prices rises. The UBS Bloomberg Constant Maturity Commodity Index gained as much as 3.1 percent to a record 1,447.015 yesterday, as crude oil, platinum, soybeans and gasoline touched their highest prices ever.

· The dollar strengthened after US data revealed a faster-than-expected rise in consumer price inflation in January, raising fears the Federal Reserve may not be able to keep cutting interest rates as aggressively as markets hope.

· The Labor Department said overall prices rose 0.4 pct, slightly above the 0.3 pct rise expected by economists polled by Thomson's IFR Markets, and pushing the annual rate of inflation back up to November's two-year high of 4.3 pct.

· Core inflation, which strips out volatile food and energy prices, rose 0.3 pct in January, slightly more than the 0.2 pct expected. On an annual basis, core inflation was up 2.5 pct year on year, the highest since Feb 2007.

· US housing starts figures were also released by the Commerce Department and showed a modest rebound, rising 0.8 pct to a 1.012 mln unit annual rate, very slightly above Thomson IFR Markets' expectations for 1.010 mln units.

Indian Bullion Spot Market

Precious metals gained in spot markets tracing Tuesday's rally in international markets.

· In Mumbai markets, gold (995) finished at Rs 12,005 per 10 gm and gold (.999) at Rs 12,060/10gm respectively. Arrivals in gold were at 150 kilos. Silver (.999) closed at Rs 22,135/kg. Arrivals in silver were at 150 kilos.

· Chennai gold (995) and gold (.999) rose by Rs 240 to finish at Rs 12,010/10gm and Rs 12,060/10gm respectively whereas Silver (.999) was up by Rs 250 to close at Rs 21,650/kg.

· Jaipur gold standard increased by Rs 200 to close at Rs 12,100/10gm whereas Silver (.999) finished at Rs 22,000/kg, up by Rs 200.

· Ahmedabad gold (995) escalated by Rs 175 to end at Rs 12,010/10gm and gold (.999) by Rs 170 to end at Rs 12,060/10gm respectively whereas Silver (.999) closed at Rs 22,150/kg, up by Rs 50.

· In Delhi bullion markets, gold (995) and gold (.999) closed higher by Rs 190 at Rs 11,980/10gm and Rs 12,040/10gm respectively whereas Silver (.999) ends at Rs 21,840/kg, up by Rs 615.


MCX Gold Apr

Technical Outlook:

Momentum studies are 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 April: Buy at 11820 for the target of 11930 and 12000 with stop loss at 11765


MCX Silver Mar

Technical Outlook:

Momentum studies are 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: Buy at 22300-340 for the target of 22600 and 22850 with stop loss at 22160

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