DGCX Gold : Rises on weak Dollar

Gold prices rose yesterday as the dollar weakened against the major currencies cutting down the previous week’s gains.



International spot gold traded in the range $866.50 - $894.70 and last quoted at $881.30 ($870.20).



Dollar eased on profit booking, after a meeting of the Group of Eight finance ministers in Japan steered clear of the greenback's recent exchange-rate weakness issue and focused on the rise in commodity prices and the related economic risks.



The greenback had gained sharply last week supported by expectations of an interest rate hike amid rising inflation, and strong retail sales data from the US.



Data from the Labor Department showed a rise in US consumer prices at the fastest pace in six months, strengthening the growing expectations for a Federal Reserve interest-rate hike. As per the data, US consumer price index climbed 0.6% in May.



Last week, the US Commerce Department reported a 1 % rise in May retail sales, the biggest increase recorded since November, letting the US currency to add to this week’s sharp gains.



Comments from Federal Reserve Chairman Ben Bernanke last week regarding growing inflation fears, which hinted at a possible rate hike later this year, also helped the dollar to strengthen against the major currencies.



The recent data from various sectors in the US have given rather mixed hints regarding the economy.



A rise in pending home sales had also supported the dollar. The National Association of Realtors’ April pending home sales index, which is considered as a leading indicator of existing home sales, rose 6.3% in April.



But a report from the Labor Department highlighted the pressures on the US job market. According to the report, initial jobless claims in the US increased by 25,000 to 384,000 in the week ending June 7. The four-week average of initial claims rose 2,500 from the prior week to 371,500. Continuing unemployment claims also recorded a rise of 58,000, to 3.14 million for the week ending May 31, the highest level in more than four years. The four-week average of continuing claims rose by 16,500 to 3.09 million in the latest week.



Also the US trade deficit had widened 7.8% in April to a seasonally adjusted $60.9 billion from $56.5 billion in March, according to the report by US Commerce Department on Tuesday. The growing deficit was driven by a surge in crude oil imports, which eclipsed a significant gain in the nation’s exports.



The Bureau of Labor Statistics of the US Labor Department reported a more-than-expected rise in the unemployment rate in May to 5.5%, against the expected 5.1%. The total number of unemployed persons increased by 861,000 to 8.5 million in May, after seasonal adjustment, as per the government's Household Survey Data.



According to the data released by Commerce Department, real gross domestic product of the US increased at a 0.9% annual rate in the first three months of the year, slightly faster than the previous estimate of 0.6%.



Last day DGCX Gold Aug traded in the range $869.00 – $897.20 and closed at $885.90 ($873.70).



Weekly Outlook (Spot Gold)



Resistances are $874, $884, $890, $899; supports $856, $845. Some recovery is expected above $884.60. If trades below $858, spot gold may move towards $845.





DGCX Gold August

TECHNICAL OUTLOOK (Intra-day)

GOLD (Aug) - Bullish above $ 887; bearish below $ 882


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