GOLD

FUNDAMENTALS

Weakening dollar against major counterparts increased the attractiveness of gold as alternative investment on Monday pushing the gold futures well above $900 per ounce mark. Firmness in crude oil prices and geopolitical tensions also supported the gold prices. Gold futures for February delivery at COMEX added $5.7 to close the session at fresh record high levels of $903.4 an ounce. The contract hit a fresh intraday high of $915.9 an ounce during the day. 

Continued fear of economic recession in US and expectations of interest rate cut by Feb in its forthcoming meeting pressured dollar. The dollar index fell to as low as 75.36, the weakest in six weeks.

Geopolitical tensions between Iran and US rose after recent statement of US president Bush. He called Iran "the world's leading state sponsor of terror". Bush said Iran funds militant groups such as Hamas, Hezbollah and Islamic Jihad and sends arms to the Taliban in Afghanistan and Shiite extremists in Iraq. 

Soaring gold prices have forced many Italian jewellers to cut the weight of their jewellery to ease the blow to clients. Italian jewelers are now cutting weight by making hollow and cutout items.

The net long positions rose to 218,004 lots for futures and options combined, up from 211,811 the prior week but short of the record peak of 224,784 hit on Oct according to CFTC data.

Gold output fell 9.9% to 8.123 tons in Kazakhstan in 2007 as compared to the previous year according to the state statistics agency.

TECHNICALS

The prices closed above short term and medium term EMAs, which supports bulls. MACD is running upwards in positive territory, showing increasing bullish momentum. Stochastic is running upwards in overbought region. The prices might see firmness.

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