GOLD

FUNDAMENTALS

Gold closed moderately higher on Thursday recouping all the initial losses as the weakness in the dollar after a strong start to the day and a recovery in energy prices after a weak start to the day helped support renewed confidence in gold. Gold futures for February delivery at COMEX added $3.40 to end at $807.10 an ounce. The contract saw the lows of $793 an ounce early in the session.

The dollar hit its fresh multi-week high Thursday morning after the Bank of England's Monetary Policy Committee cut its bank rate to 5.5% from 5.75%. The European Central Bank held rates steady at 4% as expected, but its hawkish tone pushed euro higher against dollar. The dollar index was flat at 76.385.

China, poised to overtake the US as the second-biggest gold producer this year, must acquire more bullion assets overseas because existing mines will run out of ore in six years, according to Zijin Mining Group Co. The country produces more than 200 tonnes of gold per year from mines that only have gold, and will deplete the deposits without discoveries.

With demand plummeting for IMF loans, the institution is planning to sell 400 tonnes of gold from its 3,217 tonnes of gold stock to invest in income-producing assets to put the institution on a sounder financial footing.

TECHNICALS

The prices closed above short term and medium term EMAs, which supports bulls. MACD is showing gradual fall in bullish momentum. Stochastic on the other hand has made bullish crossover in oversold region. The prices are likely to show volatile action with bullish bias.

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