GOLD

FUNDAMENTALS

Gold retreated slightly after touching fresh record high on Wednesday, but still managed to close the session with modest gains. Slight recovery in dollar and decline in crude oil prices pressured the metal to shed most of the early gains. Funds and institutional investors attracted towards gold in anticipation of a gold futures offering in Asia and talk of a gold exchange traded fund in the Middle East. Gold futures for February delivery at COMEX added 1.40 to close the session at fresh record high levels of $881.70 an ounce. The contract hit a fresh intraday high of $894.40 an ounce. 

The dollar was slightly higher against major counterparts with the dollar index gaining 0.5% to 76.460. The US currency moved up sharply against the British pound sterling on increased expectations of interest rate cut by Bank of England after dismal retail sales figures.

Goldman's U.S. economic team said Wednesday that they are expecting a mild recession lasting two or three quarters this year, which would pressure Fed to cut interest rates to 2.25% levels by late 2008 from current 4.25%. The recession would lead to a cumulative drop in gross domestic product of about 0.5%, according to Goldman.

Turkey’s gold imports rose 20% last year despite rising prices. Imports climbed to 230.8 metric tons last year, compared with 192.7 tons in 2006, according to Istanbul Gold Exchange data. The increase was the biggest since the exchange began recording data in 1995. Turkey aims to process 200 tons of gold for export in 2008.

TECHNICALS

The prices closed above short term and medium term EMAs, which supports bulls. MACD is running upwards in positive territory, showing increasing bullish momentum. Stochastic is running down in overbought region. Prices are likely to see volatile movements with firm bias.

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