GOLD

FUNDAMENTALS

Gold surged higher on Tuesday supported by initial firmness in crude oil prices and record rally in platinum. Gold futures for February delivery at COMEX added $8.10 to close the session at $807.4 an ounce. The contract saw the highs of  $811.4 an ounce during the session.

The dollar remained almost unchanged on Tuesday after U.S. report showed housing starts and building permits fell in November and the European Central Bank said it added $500 billion to the banking system to ease the credit crunch. The dollar index was flat at 77.405. Housing starts in the U.S. dropped 3.7 percent and permits for future construction slid to a 14-year low, according to the Commerce Department.

Investment demand of gold continues to remain healthy as depicted by increasing gold holdings of ETFs. Investment in the StreetTracks Gold Trust, the biggest exchange-traded fund backed by bullion, reached a record 616 metric tons on December 12.

The Eurosystem's reserves of gold and gold receivables fell EUR32 million to EUR185.303 billion in the week ended December 14, according to the European Central Bank.

Trading in gold is likely to remain sideways on thin trading towards the closure of the year and volatile action in currency and energy markets.

TECHNICALS

Bullish long day pattern shows firmness in the market. Close above short term and medium term EMAs supports bulls. MACD is showing decrease in bullish momentum. Stochastic is also heading downward in normal region. Prices may remain volatile with bearish bias.

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