GOLD

HIGHLIGHTS OF THE WEEK:

• 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.
• According to the Barrick Gold Corp., the world's largest gold producer, gold supply will fall faster than expected as it gets harder to extract the precious metal from deeper and older mines.
• India's gold jewelry exports rose by 17%in the first seven months of the financial year that started in April to $3.19 billion, according to the Gem and Jewelry Export Promotion Council.
• China Gold Association’s Vice Chairman stated China may surpass U.S. to become world's second largest gold producer this year, as its production is estimated to be 260 mt. China's gold output last year rose 7.15% to 240.078 mt.
• The State Statistics Agency of Kazakhstan disclosed Kazakhstan’s January-October Gold output fell 8.7% on year to 6.761 mt.

MARKET COMMENTARY:

Gold prices witnessed some correction during the week as strengthening dollar, concerns of slow down in global economy and initial weakness in crude oil prices triggered profit booking in the metal. Gold for December delivery at COMEX recorded a low of $783 during the week and closed at $787 on Friday. For the current consolidation phase, the supports of $767 and 750 are important which will determine further outlook of the market.  December gold on MCX managed to end the session above the psychological level of Rs. 10000 at Rs. 10053 after touching a low of 9925.

FUNDAMENTAL OUTLOOK:

Gold is likely to recover after some more consolidation. 

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