GOLD

FUNDAMENTALS

Gold futures finished slightly higher on Monday as weakness in dollar spurred interest in metals as inflation hedge. Gold futures rose for the first time in last three sessions. However, it pared most of the early gains as dollar recovered most of its losses. Gold benchmark June contract on COMEX finished up $1.70 at $928.70 an ounce after reaching an intraday high of $934.50.

Group of Seven (G7) finance ministers earlier raised concerns over the US economy. The G7 and the IMF governing bodies have said that they would take necessary steps to ensure market stability.

US retail sales data have shown some improvement. Retail sales for the month of March increased by 0.2%, better than expected level of 0.1%. Retail sales excluding auto, for the month of March, rose 0.1% as par the data released.

South African gold production dropped 28.2% (YoY) in February, according to official data. London-based metals consultancy GFMS Ltd. recently said gold output in South Africa would likely decline further this

Net official sector sales in 2007 rose by 30% on the year to total 481 tons due largely to an increase in Central Bank Gold Agreement sales, according to the recent report of GFMS Ltd.

TECHNICALS

Candlesticks pattern suggests indecision in the market. Close above the 9-day EMA indicates that the short-term trend is turning firm again. However, close below 18-day EMA supports intermediate-term weakness in the market. 14-day RSI is in neutral region and would support both way movements. Gold futures are likely to trade upwards with possibility of some initial weakness.

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