GOLD

FUNDAMENTALS

Gold futures retreated all the initial gains of the session on Friday pressured by profit booking ahead of weekend. The market ignored slight weakness in dollar and firmness in crude oil prices as high volatility in the metal prices recently induced traders to book profit going into weekend. COMEX December Gold closed the session with a loss of 30 cents at $787.0 an ounce. The contract traded as high as $798.4 an ounce before profit booking hammered the metal prices down.

The dollar fell against the euro and the pound Friday and gained on the yen on lingering worries about the impact of the credit crunch on the economy an growing uncertainty about another U.S. interest rate cut. The dollar index was at 75.795, down from 76.020.

Barclays Capital lifted gold price forecast for 4Q 2007 to $790 a troy ounce from $750/oz and 1Q 2008 forecast to $840/oz from $730/oz due to stronger than expected movements aligned with weakening USD and rising oil prices.

High gold prices are imparting exaggerated volatility in the futures market and the metal has become more vulnerable to uncertain economic prospects.  Swelling fund participation along with gold's sensitivity to other markets has also led to churning action in the bullion market. In such a scenario, some more consolidation in the gold prices cannot be ruled out.

TECHNICALS

The prices have closed below short and medium term EMAs, which supports bears. MACD is running down in positive zone showing decreasing bullish momentum. RSI & Stochastic are falling in neutral region indicating weakness. Gold may trade range bound.

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