GOLD

FUNDAMENTALS

Gold declined sharply on Friday on end of the month profit booking as weakness in crude oil prices and firmness in dollar induced traders to lock in gains. Gold futures for December delivery at COMEX settled down $13.20 at $789.10 an ounce. The contract declined sharply during the week accumulating a loss of $42.70 during the period.

The dollar inched further higher on Friday despite some bearish signals from economic data and rising expectations of interest rate cut by Fed. The dollar index rose 0.7% at 76.125.

The recent sharp decline in the prices seems mere correction in long-term bull market. It has delayed the gold’s march to the all time high levels, but overall it is still bullish in medium to long term. Gold ETFs are still holding a huge amount of gold in their vaults, which speaks of healthy investment demand. Holdings in the world's largest exchange-traded fund, streetTracks, hit a record-high 609.33 metric tons recently.

Peru's output of gold declined in October, according to the Energy and Mines Ministry. The government said that gold output totaled 14,111 kilograms in October, down 11.7% compared with the same month a year before, as production dropped at a number of mines.

Mexico’s gold production fell in September 17.2% to 3,202 kilograms from the year-ago month according to National Statistics Institute.

TECHNICALS

Prices have closed below short term and medium term EMAs, which supports bears. MACD has made bearish crossover in positive region. RSI is heading downward in normal region. Gold may extend the weakness in prices.

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