GOLD

FUNDAMENTALS

The record high levels of crude oil prices and fresh all time low of dollar against euro pushed the gold prices to 28 years high levels Friday.   Gold for December delivery on the COMEX added $16.5 to close the session at $787.5 an ounce.

The dollar dropped against the major counterparts Friday touching record lows against euro on rising expectations of 25 basis point interest rate cut by Fed. The dollar index fell 0.3% at 77.04.  After the Federal Reserve's 0.5% rate cut, the U.S. yield advantage over other countries diminished and will drop further as more rate cuts are made.

The investors continue to hop on gold and there is no sign of profit booking in the metal despite its recent run-up in prices. The open interest has hit a fresh record high of 505,224 at Comex. However, if the Fed doesn’t cut the interest rates as per market expectations, a heavy correction can be seen. 

Meanwhile, geopolitical tensions continue to increase gold’s allure as safe haven investment.

Turkey has gathered troops along the border and the Turkish military has been hitting suspected rebels bases. Further, Iran said Friday that U.S. sanctions targeting its Islamic Revolution Guards Corps and three state-owned banks were destined to failure.

TECHNICALS

The bullish long day pattern of candlestick shows the dominance of bulls. The prices closed well above short and medium term EMAs, which supports bulls. MACD is showing slight increase in bullish momentum. RSI is running upward in overbought region, which warrants caution to bulls. The prices are likely to see range bound movements.

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