GOLD
HIGHLIGHTS OF THE WEEK:
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South African gold output fell 4.9 percent in volume terms in August as compared to the same period previous year.
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Central Bank gold sales during the fourth year of the Central Bank Gold Agreement are likely to fall short of the annual 500 tonnes quota after Germany's announcement that it won't take up its allocation. Gold sales during the third year of the agreement that ended on Sept. 26 totaled 475.75 tonnes.
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Barclays Capital raised 4Q 2007 gold price forecast to $750/oz due to key price drivers turning positive. UBS has also revised up its gold price forecasts for 2008 and 2009 due to the changing macroeconomic outlook. It has increased its 2008 forecast to $760 an ounce from $650, while they now expect bullion to average $700 an ounce in 2009 versus a previous forecast of $550.
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The gold reserves of euro-system decreased EUR150 million to EUR186.083 billion in the week ended Oct. 5, according to the ECB.
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U.S. gold imports fell 57.4% in August to 7.28 tonnes from the previous month, and were down 27.5% from the previous year. Whereas, U.S. gold exports rose 41.5% in August from the previous month to 47.14 tonnes, and were up 87.5% from the previous year, as per Commerce Department report.
MARKET COMMENTARY:
Gold prices surged higher during the week after some initial weakness as soaring crude oil prices and record weakness in dollar kept the investment demand for the yellow metal high. Gold for December delivery at COMEX rose $6.6 during the week to close at $753.80 an ounce after trading as high as $759.3. December gold on MCX ended the session at Rs 9586 per 10gm on Friday.
FUNDAMENTAL OUTLOOK:
Gold is likely to trade with positive bias supported by strong investment demand.
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