FUNDAMENTALS

Gold extended the gains of the previous session recouping some of the previous week’s losses on Tuesday as weakness in dollar induced traders to cover short positions. One day strike of South African miners on safety issue also pushed the prices higher. Gold futures for February delivery at COMEX added $5.60 an ounce to close the session at $794.70 an ounce. The contract shed $42.70 last week.

The dollar slipped against most major counterparts, undermined by increasing expectations that the U.S. Federal Reserve will further cut interest rates next week, but jumped against its Canadian counterpart after the Bank of Canada's own interest rate cut. The dollar index fell 0.4% at 75.685.

Chinese demand for gold jewelry may increase by about 20 percent this year as rising personal incomes help the nation race ahead of the United States as the second-biggest market in the world, according to GFMS. Gold use in jewelry in China jumped 24 percent from a year earlier to 221 tonnes in the first nine months against 515 tonnes in India and 165 tonnes in the United States.

Lihir Gold Ltd. Wednesday said it expects normal operations at its Ballarat Goldfields mine to resume by mid- to late January. The mine accident in November is likely to affect Lihir's production target of up to 100,000 ounces of gold in 2008 from Ballarat.

TECHNICALS

Bullish long day pattern shows firmness in the market. Prices have closed above short term and medium term EMAs, which supports bulls. MACD is running flat in negative region. However, oversold levels of RSI and stochastic warrants caution to bears.

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