GOLD

HIGHLIGHTS OF THE WEEK:

• Looking at the rising inflation concerns, geopolitical tensions and continued weakness in dollar throughout the year, investment demand for the metal remained robust in 2007. Gold holdings in the world's main gold exchange traded funds (ETFs) totaled record 28.63 million troy ounces at the end of 2007, according to CPM Group. This is up from 20.25 million ounces at the end of 2006. The largest gold holdings were in the streetTRACKS Gold Shares, which launched in the U.S. in November 2004. This held 20.18 million ounces at the end of December, up from 14.57 million ounces at the end of 2006.
• Geopolitical tensions surfacing in a number of areas, including Kenya, Pakistan and Middle East, are prompting some safe-haven buying of precious metals.
• Peru’s gold production declined 3.6% in November to 15,695 kilograms, compared with the same month a year before, as production dropped at two large mining operations, the Energy and Mines Ministry said late Friday.
• The Eurosystem's reserves of gold and gold receivables fell EUR40 million to EUR184.494 billion in the week ended Dec. 28, the European Central Bank said Wednesday. The Eurosystem consists of the Frankfurt-based ECB and the 15 euro-zone national central banks.
• Gold demand from the jewelry sector is starting to slow on record high prices. Consumers in emerging economies such as India are slowing purchases of gold jewellery Jewelry demand accounts for around two thirds of total gold consumption. But, high investment demand on inflation concerns, geopolitical tensions and continued weakness in dollar, might keep the gold on positive side

MARKET COMMENTARY:

Gold climbed to record highs during the week as rising geopolitical tensions, soaring crude oil prices and weakening dollar kept investment demand robust. Gold for February delivery at COMEX climbed to the highs of $872.9 on Thursday before closing the week at $865.7 an ounce with a healthy gain of $23.4. February gold on MCX closed at Rs 10935 per 10 gm on Friday. 

FUNDAMENTAL OUTLOOK:

Gold is likely to trade with firm bias on rising geopolitical tensions, soaring crude oil prices and weak dollar.

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