GOLD

FUNDAMENTALS

Gold surged to 28-year highs as continued weakness in dollar, high crude oil prices, rising inflation and geopolitical tensions triggered heavy buying in gold. Gold for December delivery on the COMEX gained $8.4 to close the session at $762.20 an ounce.

Rising tensions between Iraq and Turkey increased safe haven demand for gold. Over the weekend, Kurdish rebel commander warned Turkey it would encounter tough resistance and a Vietnam-style conflict if it launched a large-scale offensive against Kurdish rebels in northern Iraq, according to media reports. 

The funds continued to accumulate gold during the week ending Tuesday, as per CFTC data. The net long position of funds stood at 211,651 lots for futures and options combined, more than triple the 69,425 total from Aug. 21 and up from 194,911 the prior week.

India is expected to import 800 metric tonnes to 900 tons of gold in 2007, up from 715 tons in 2006, against earlier expectations of 1000 tonnes according to WCG. Till September, India had already imported 715 tonnes of gold.

Turkey's gold jewelry exports rose 21.6% to 71.4 metric tons in January to September from the same period a year ago according to the data from the General Secretariat of Istanbul Mineral and Metals' Exporters Association. Meanwhile, gold production in Kazakhstan during January-September fell by 10% to 5.999 tonnes.

TECHNICALS

The prices closed above short term and medium term EMAs, which supports bulls. MACD is turning flat and is giving no clear indication at this stage. Stochastic is running upward in overbought region, which warrants caution to bulls. Prices are likely to move with positive bias.

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