Thursday, January 21, 2010

Gold Losing its Shine..

MCX Feb Gold contract opened downside flat at 16674 per ten gram this morning as against previous close of 16680 made an intraday high at 16690 and presently at 4.16 pm it traded at 16542 down by 138 rupees.

14 days RSI for MCX gold Feb contract is at 37 level and it shows downtrend.

“Technically, Gold looks bearish and range for MCX Gold is from 16400 to 16800,” said Shyamal Mehta, Research Analyst.

Gold prices are likely to fall as dollar likely to get stronger against major currencies. Support for the Gold contract is seen at 16400 and below could see a test of 16300. Resistance is now likely to be seen at 16750, a move above could see prices testing 17850.

Gold prices were seen hitting fresh two-week lows in London on Thursday, as the EUR/USD extended previous days of heavy losses, trading at five month lows in the bottom 1.40’ies on the back of continuous worries about European sovereign debt and as mixed Euro-zone PMI data offered little support.

Wednesday’s softer than expected core producer prices index in the U.S. also dented gold’s appeal as a hedge against inflation, traders said.

Carl Johansson, Sr. precious metals analyst with remarked that “it’s a combination of factors that have deteriorated sentiment and have increased the belief that gold is overpriced; the Euro residing at five month lows, inflation data that keeps tame and investment demand that is, well, mostly inexistent”.

He added that over 13,000 lots large February gold put option at $1,100 is expiring next week, and has gained attention as prices work their way in this direction”.

“A break below here could give bears fresh breath”, Johansson said, adding that “a key technical trend support is near $1,102.50, and a break here would seriously deteriorate charts and open for a re-test of the December $1,075.20 an ounce lows”.

At 10.21GMT on Thursday, spot gold was quoted $1,105.70, down from $1,111.70 late in NY on Wednesday. Earlier today, the yellow metal had fallen as low as $1,105.00 an ounce.

At the same time, the benchmark COMEX gold futures contract was trading $8.1 at $1,104.50 an ounce in electronic trading.

The EUR/USD pair was at 1.4056. A break below the 1.40 mark could set off new batches of stops, one London based FX-dealer said, although added that “charts are oversold, a bounce is ultimately expected”

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