GOLD

FUNDAMENTALS

Gold declined on Thursday as weakness I US stocks and strong dollar pressured the prices. The volume of trade remained low ahead of holidays. Gold futures for February delivery at COMEX shed $2.0 to close the session at $805.4 an ounce. The contract saw the highs of  $811.4 an ounce during the session.

The dollar rose against the euro and surged to a three-month peak against sterling on Wednesday amid signs that financial market turmoil was starting to threaten economic growth beyond U.S. borders. The euro was hit after an index of German business sentiment came in close to one-year low, prompting investors to increase year-end dollar buying. Meanwhile, the currency markets ignored the decline in U.S. stocks following a warning from Standard & Poor that it may downgrade ratings on bond insurers. The dollar index gained 0.3% at 77.605.

The gold scrap sales in India and the Middle East has been surprisingly this year despite higher prices, according to London-based metals consultancy GSFM LTD. Sales of gold jewellery by consumers for melting and refabrication, dubbed scrap, usually rise, particularly in price-sensitive regions such as India and the Middle East with the increase in prices. The average quarterly gold scrap sales in India have declined this year to 20 tonnes against 30 tonnes in 2003.

Trading in gold is likely to remain sideways on thin trading towards the closure of the year and volatile action in currency and energy markets.

TECHNICALS

Candlestick formation shows indecision in the market. The prices have managed to above short term and medium term EMAs, which supports bulls. MACD is showing decrease in bullish momentum. Stochastic is heading upwards in normal region. Prices may remain volatile with bearish bias.

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