GOLD

FUNDAMENTALS

The gold futures surged higher on Monday as weakness in dollar on expected interest rate cut by Fed boosted demand for the precious metal as alternative investments. Meanwhile, the market ignored the slight weakness in crude oil prices. Gold futures for February delivery at COMEX added $13.30 to close the session at $813.50 an ounce. Continued weakness in dollar might push gold to record highs, however some volatility on yearend profit booking cannot be ruled out. 

The dollar fell against the euro and other major counterparts on expected Federal Reserve interest rate cut. The dollar index dropped 0.3% to 76.10. The Federal Reserve is expected to cut interest rates by a 25 basis points and discount rate by 50 basis points on Tuesday.

Gold Fields Ltd. Monday said its attributable ore reserves had declined 2.3% by the end of June, largely due to mining operations. Gold reserves at Gold Fields' South African operations were 72.5 million ounces, down 1.9% from December, while gold reserves at the company's international operations were 3.2% lower at 21.8 million ounces.

Turkish gold bullion imports rose to 14.1 metric tons in November from 13.9 tons in the corresponding month last year, according to the Istanbul Gold Exchange data. In the first 11 months of the year gold imports to Turkey rose to 220 tons from 193 tons in the corresponding period in 2006.

TECHNICALS

Bullish long day pattern of candlestick shows firmness in the market. Prices have closed above short term and medium term EMAs, which supports bulls. MACD is showing gradual fall in bullish momentum. Volatility is expected.

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