GOLD

FUNDAMENTALS

Gold prices recouped all the initial losses to close with marginal gains on Wednesday supported by firmness in crude oil prices and slight weakness dollar. But the gains were limited as the market remained in indecision regarding the impact of liquidity injection by central banks to ease credit crunch in the financial markets. Gold futures for February delivery at COMEX added $1.70 to close the session at $818.80 an ounce. The contract saw the highs of $822.30 an ounce during the session.

The Fed on Wednesday announced the creation of a temporary short-term lending facility to ease credit market strains in concert with market-calming actions by several other major central banks, including the European Central Bank and the Bank of England. This eased some of the concerns of the credit market, which in turn dulled the safe haven demand for gold. 

The dollar was mixed Wednesday, slipping against the euro and pound but jumping against the yen. The dollar index fell down 0.1% to 76.150.

U.S. gold imports fell 26.7% to 7.766 tonnes in October from the previous month, whereas exports fell 4.9% during the month to 28.9 tonnes, according to the Commerce Department. Further, Papua New Guinea gold miner Lihir Gold Ltd cut its 2007 production forecasts by 7% to 700,000 ounces due to unplanned maintenance shutdowns.

TECHNICALS

Prices have closed above short term and medium term EMAs, which supports bulls. MACD is showing gradual fall in bullish momentum. Stochastic is running upward in normal region. Volatile price action is likely.

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