GENERAL MARKET CONDITIONS

Gold, silver and copper fell after the Fed cut interest rates by 0.75% as the US dollar gained. In March, the US dollar has fallen too swiftly which contributed to gold and silver’s rise, so the fall was imminent. Gold had further gotten a boost from safe haven demand in the wake of negative sentiment for global stock markets. The Fed funds rate is at 2.25% and the Fed may cut interest rates by another 0.50% by next month end or even before then if the US economy deteriorates by then. After April, the Fed may not cut interest rates for the rest of the year, while other central banks may cut interest rates which will give the US dollar added advantage. Currency traders should buy some far dated US dollar call options on any weakness while precious metal traders should buy some near dated put options as a hedge against any price fall. Crude oil, I am not a bull and expect it to top out soon.

Trading volumes will fall from today as Easter starts. However it’s still not a time to sleep for the day traders or jobbers. Bid – Ask Spreads in MCX as well as Comex are on the higher side which is giving nightmares to the jobbers as his stop losses get triggered very quickly. As long as volatility remains high, bid-ask spreads as bound to remain high.

GOLD -- APRIL FUTURE

Gold can near $930 in the short term and yet maintain the bullish trend. Short Term resistance between $1020 and $1032.

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