comex gold outlook

Gold reversed gains yesterday and closed $20 lower as the dollar bounced back and oil price fell.

International spot gold traded in the range $975.95 - $942.80 a Troy Ounce and last quoted at $945.00 ($965.30).

Dollar recovered on supportive comments from top officials - Philadelphia Federal Reserve Bank President Charles Plosser and US Treasury Secretary Henry Paulson.

But according to the release by Office of Federal Housing Enterprise Oversight, US home prices fell 0.3 percent on a seasonally-adjusted basis from April to May. For the 12 months ending in May, the prices fell 4.8 percent.

US Conference Board's index of leading economic indicators, a forecast of future economic activity, showed a decline of 0.1% in June. The result for May, which had been estimated to have risen 0.1%, was revised to a decline of 0.2%. The index has slipped 0.9 percent for the six months ending in June.

Oil price fell after worries that storms may disrupt oil supplies in the Gulf of Mexico eased. According to latest reports, Tropical Storm Dolly is not expected to have a major impact on oil and natural gas operations in the Gulf.

A smaller-than-expected quarterly loss from Citigroup Inc, the largest bank in US, last week had slightly eased worries about the US financial sector.

Weekly data from the US Labor Department showed first-time claims for state unemployment benefits rose 18,000 to 366,000 in the week ended July 12, but the four-week average of initial claims fell 4,500 to 376,500. Continuing claims fell to 3.12 million for the week ended July 5, down 81,000. The four-week average of continuing jobless claims increased by 16,500 to 3.14 million, the highest level since February 2004.

According to the data released by the Federal Reserve on last Wednesday, output of US factories, mines and utilities increased 0.5% in June, following a 0.7% drop in April and a 0.2% decline in May. But for the quarter as a whole, industrial production was down at a 3.1% annual rate.

The US Labor Department reported that the nation’s Consumer Price Index rose 1.1 % in June to an annual pace of 5.0%, underscoring the Fed concerns about rising inflation and sluggish growth.

Federal Reserve Chairman Ben Bernanke had said last week that the US economy is facing significant risks to growth. He also urged that Fed must remain particularly alert to any sign that inflation is getting out of control.

The US government's rescue plan for mortgage giants Fannie Mae and Freddie Mac heightened fears about the financial market. On July 13, the government had announced bailout for the two GSE’s (Govt. Sponsored Enterprises).

Meanwhile, the US trade gap narrowed unexpectedly in May. The US Commerce Department reported a 1.2 % decrease in trade deficit in May to $59.8 billion deficit from the revised $60.5 billion in April.

The unemployment rate in US remained at a four-year high of 5.5% in June, according to the release by the Labor Department.

The US Commerce Department in its final revision to GDP estimates said that the economy grew at a slightly faster pace in the first quarter than originally reported. Real GDP was revised to a 1.0% annual rate in the first three months of the year, up from an originally reported reading of 0.9%.

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

Weekly Outlook (Spot Gold)

More correction expected below $948. Resistances are $959.10, $966.40, $972.00; Supports $936, $925, $912.

Last day DGCX Gold Aug traded in the range $976.30 – $944.30 and closed at $945.80 ($964.80).

TECHNICAL OUTLOOK (Intra-day)

GOLD (Aug) - Bullish above $ 955.50; bearish below $ 950.00

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