GOLD

FUNDAMENTALS

Gold inched higher in a thin trade on Thursday as weaker dollar continued to increase the attractiveness of the precious metal as alternative investment. The US markets remained closed on account of Thanksgiving Day holiday. Spot gold inched higher to $803.20/804.00 an once from 802.90/803.60 an ounce late in London. The markets are likely to remain thin on Friday too as the Japanese markets are also closed for a public holiday.

The dollar hit new record lows against the euro, and a basket of currencies on Thursday on growing belief that the U.S. Federal Reserve will cut interest rates again next month. The dollar index hit an all-time low of 74.636 and taking year-to-date losses to 11 percent. It also weakened against the yen slipping to a fresh 2.5 year low near 108 yen. The euro rose to a record high around $1.4930.

Worries that a deep U.S. housing slump and tight credit would hit consumers have cast a shadow over the health of the U.S. economy, which in turn is raising expectations of interest rate cut by Fed.

Soaring crude oil price is also supporting the metal’s role as a hedge against inflation. High crude prices in conjunction with weak dollar have increased investment demand for gold tremendously in the recent time.

TECHNICALS

Prices have closed above short and medium term EMAs, which supports bulls. MACD is showing decrease in bullish momentum. RSI is heading upwards in normal region. The prices are likely to see firm bias.

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