Gold outlook

Gold prices skyrocketed in early trade today, to record a fresh high of $1030.80 a Troy ounce, as the dollar tumbled after the Federal Reserve in a an unexpected move on Sunday night cut its discount rate for direct loans to banks by 0.25 percent point to 3.25 percent, and launched a new discount window facility for primary dealers, in desperate moves to stabilize financial markets.



The emergency moves deepened investors’ worries about the state of US economy, and boosted speculations regarding the possibilities for more casualties in the widening US financial crisis.



On Friday, international spot gold traded in the range $990.50 - $1007.10 and last quoted at $992.80.



Dollar was pulled down to a new all-time low versus the Euro. Adding to the pressure on the greenback, the consumer confidence in US recorded a drop. The University of Michigan/Reuters index tracking consumer sentiment dipped to 70.5 in March from 70.8 in February.



In a separate report, the US Labor Department said on Friday the consumer price index was flat in February against the expectations of a 0.2 % increase.



The US Commerce department reported a worse-than-expected 0.6 percent fall in the Retail Sales in February.



Another release by the US Labor Department showed the initial claims for state unemployment benefits remained unchanged at 353,000 in the week ended March 8. The four-week average of initial claims fell slightly in the latest week, down by 1,250 to 358,500.



Positive economic data from the Euro-zone, according to which industrial production posted a 0.9% rise in January and 3.8% rise annually, added to the strength of the European currency.



The Federal Reserve had announced new steps to boost liquidity in the banking system.



The Fed said it would increase the size of its emergency auctions by $40 billion, which means providing $100 billion to primary dealers in US Treasury debt. It also would start a series of term repurchase transactions with the primary dealers that trade securities directly with the Fed, expected to be worth a total of $100 billion.



Meanwhile, the US Commerce Department reported on Tuesday that the US trade deficit widened slightly in January, up 0.6% to $58.2 billion.



Medium term outlook (Spot Gold)

Bullish above $916; Resistances are $926, $932, $947, $954, $973, $984, $995, $1002, $1022, $1035, $1052; supports $896, $883. Further up-trend is expected above $954.60.



Last day DGCX Gold April traded in the range $991.90 – $1008.00 and closed at $1000.80 ($994.40).



TECHNICAL OUTLOOK (Intra-day)



GOLD (April) - Bullish above $ 1003.00; bearish below $ 998.00

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