GOLD

FUNDAMENTALS

Gold surged to a record high level on Monday as historical highs of crude and continued weakness in dollar supported the prices.  Gold for December delivery on the COMEX added $5.1092.60 to close the session at $787.5 an ounce, meanwhile it touched the highs of $798.30 an ounce during the session.

The dollar declined further against the major counterparts Monday as market remained focused on the Fed meeting. Fed is expected to cut interest rates by 25 basis points which will decrease the interest rate advantage of the currency. Meanwhile, soaring crude oil prices to historical highs also supported the gold prices. 

Geopolitical tensions, over Turkey's threat of a military invasion of Northern Iraq to chase Kurdish rebels, also increased gold demand as safe haven investment.

The funds decreased their net long positions in Comex gold futures and options to 209,869 lots, according to late Friday CFTC data. That was down from the funds net length of 224,784 lots the prior week.. 

Lihir Gold Ltd. Tuesday downgraded its full year gold production guidance in the wake of strikes at its mine in Papua New Guinea.   The miner expects to produce about 750,000 ounces of gold in 2007, down from previous guidance of between 800,000 and 830,000 ounces.

TECHNICALS

The long upper shadow of candlestick shows tentativeness at higher levels. The prices continue to hold the levels above short term and medium term EMAs, which supports bulls. Rising MACD in positive region shows increasing bullish momentum. The overbought levels of RSI and stochastic warrants caution.

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