GOLD

FUNDAMENTALS

Gold prices retreated Tuesday as weakness in crude oil prices and uncertainty about Fed’s interest rate decision induced traders to book profit.  Gold for December delivery on the COMEX shed $4.8 to close the session at $787.8 an ounce.

The dollar regained some strength after the Wall Street Journal reported that the case for the Federal Reserve to lower rates isn't clear-cut, contrary to market expectations of a 25 basis point cut. If the Fed leaves rates unchanged despite soft U.S. economic data, dollar will recover and a sharp correction in gold can be seen.

China's Jan-Sept gold production rose by 13% on year to 191.456 metric tons, according to the National Development and Reform Commission. The country's top economic planning body in February set the production target for this year at 260 tons, up 8.3% from last year.

According to the National Australia Bank, gold prices are poised to rise by around 8% on year to average $740 a troy ounce in 2008, and much of the rise will be driven by expected dollar weakness.

Minera Yanacocha SRL (Peru) said Tuesday that its gold sales could end the year between 1.5 million ounces to 1.6 million ounces as production is expected to be slightly lower.

TECHNICALS

The long lowerr shadow of candlestick shows tentativeness at lower 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.

Click here to download full report

Reliance Money Disclaimer