bullion intraday

Gold Decline on U.S. Inflation outlook
26 June 2008 10:04:30

Gold Decline on U.S. Inflation outlook and as a decline in energy costs reduced demand for the precious metal as a hedge against inflation. Crude-oil futures declined for the first time in four sessions after jumping to a record last week and doubling in the past year.

India spot gold closed marginally lower on Wednesday on weak global cues, a stronger rupee and lack of buying support.

Gold, which is often used as a hedge against inflation, may be pressured if the market boosts expectations that the Fed intends to contain inflation by lifting interest rates later this year, which would boost the dollar.

A firmer U.S. currency pressures the price of dollar-denominated assets, such as crude oil and gold, as it makes them more expensive for holders of other currencies. The dollar remained steady against major counterparts Wednesday, after a report showed orders for durable goods were unchanged in May, beating expectations for another decline.

Strong demand for platinum and palladium in the auto industry likely will help shrink supply surpluses for the metals this year, sending prices even higher, Platinum prices climbed to an all-time high of more than $2,300 in March, and palladium prices climbed to a multi-year high of $600 during the first quarter of this year, according to CPM Group's 2008 Platinum Group Metals Yearbook.

Gold held in London-listed exchange-traded funds managed by ETF Securities Ltd. rose to a record. Gold held by the Jersey, Channel Islands-based Company advanced 1 percent to 1.263 million ounces.

Turkey gold imports normalized in May, as the gold price receded, the lira recovered and demand - both domestic and export – picked up, according to the World Gold Council Wednesday. Gold imports skyrocketed almost 20-fold to 19.4 metric tons in May, from 1.03 tons in April and 675 kilograms in March, Istanbul Gold Exchange said this week.

U.S.Economy:

The Federal Reserve concludes its two-day meeting this afternoon and is expected to keep the federal funds rate unchanged at 2.0%. Traders will be watching the comments for signs of future bias in monetary policy.

The U.S. Census Bureau said that new home sales were at an annual rate of 512,000 units in May, down 2.5% from April's pace and as expected. So far in 2008, new home sales are down 37% from a year ago. September lumber is steady.

The U.S. Commerce Department said that durable goods orders were unchanged in May, as expected. Excluding transportation, orders were down .9%, also as expected.

Currencies update:

Eurostat said yesterday that industrial new orders in the Euro area 15 were up 2.5% in April and up 11.8% from a year ago. Based on comments to the European Union, analysts are saying that it is almost certain that European Central Bank President Trichet will increase the interest rate on July 3rd when it next meets.

The Reserve Bank of India increased its interest rate from 8.00% to 8.50% in an effort to restrain inflation. Consumer prices were up 11% from a year ago in the latest report, the biggest annual gain in 13 years.


MCX Gold June - Technical Outlook:


The daily stochastic have crossed over down which is a bearish indication. The stochastic indicators are decreasing from overbought level, which is bearish and should support lower prices. The market's short-term trend is negative as the close remains below the 9-day EMA. The upside closing price reversal on the daily chart is somewhat positive.

Technicals are neutral to bearish signaling sideways to lower prices in the near term. Initial support for the market is around 12132 levels. if broken can see further fall to 12034 and 11918 If market holds above 12278 further rally can be seen towards 12346 and 12462


Recommendations–MCX Gold Aug: Sell at 12340 Target 12240 and 12130 Stoploss at 12380

MCX Silver July - Technical Outlook:

The daily stochastic have crossed over down which is a bearish indication. The stochastic indicators are decreasing from overbought level, which is bearish and should support lower prices. The market's short-term trend is negative as the close remains below the 9-day EMA. The upside closing price reversal on the daily chart is somewhat positive.

Technicals are neutral to bearish signalling sideways to lower prices in the near term. Initial support for the market is around 23271 levels. if broken can see further fall to 23131 and 22913 If market holds above 23499 further rally can be seen towards 23629 and 23847

Recommendations-MCX Silver July: sell at 23620 Target 23470 and 23230 stoploss at 23755


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