GOLD

FUNDAMENTALS

Gold extended the gains of the previous session Wednesday as weakness in dollar and firm crude oil prices supported the prices. Gold for December delivery on the COMEX added $2.90 to close at $746.0 an ounce.

Dollar weakened further as the minutes of Fed meeting failed to dismiss the expectations of another interest cut. Lower interest rates hammers the returns on dollar-denominated assets and thus pressure the greenback. The dollar index was at 78.315, down from 78.470 in late U.S. trading Tuesday.

The signatories to the Central Bank Gold Agreement sold 475.75 metric tons in the year to Sept. 26, according to the Bank for International Settlements.

Meanwhile, Bank of Italy Governor said Wednesday the sale of some of the central bank's gold reserves would cut the country's debt by just 0.4% of gross domestic product and thus the benefits for the Italian budget would be limited. The government aims to cut 2008 public debt to 103.5% of GDP from 105% this year.

Physical demand continues to remain healthy in Asia and with rising prices of crude oil and commodities in general is keeping investment demand for gold as inflation   hedge robust. Any major decline in the gold prices on profit booking would be supported by strong physical demand during fourth quarter.

TECHNICALS

Long upper shadow of candlestick shows tentativeness at higher levels. The prices closed above medium term EMA, which supports bulls. MACD is showing decrease in bullish momentum. Stochastic is also favoring bears in normal region. Volatile action is likely.

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