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Oct 03, 2012, 11.55 AM IST | Source: Moneycontrol.com

Gold has resistance at USD 1792: Microsec

Microsec has come out with its report on Gold and Silver. According to the research firm, gold and silver could resume their upward trend especially if the minutes of the FOMC meeting and Bernanke’s speech will contribute to the speculations that the Fed could consider additional monetary steps in the near future.

Microsec has come out with its report on Gold and Silver. According to the research firm, gold and silver could resume their upward trend especially if the minutes of the FOMC meeting and Bernanke’s speech will contribute to the speculations that the Fed could consider additional monetary steps in the near future.

Gold and Silver:

Gold edged down during last week by 0.26%; further, during said time the average price reached $1,767.8 /t. oz which is also 0.26% below the previous week’s average. Gold finished at $1,773 /t. oz. Silver also slipped on a weekly scale by 0.18%; further, the average rate decreased by 1.09% to reach $34.22/t oz compared to the previous week’s average rate.

During last week, gold and silver prices slightly declined as the recent developments in Greece, Spain and Italy that included riots against austerity measures may have pulled down not only bullion rates but also the Euro as it Euro decreased against the U.S dollar by 0.94% (on a weekly scale); The deprecation of the Euro, Canadian dollar and AUD may have contributed to the decline of precious metals. The correlation between the Euro/USD and precious metals remains mid-strong and positive: during September the correlation between Euro/USD and gold reached 0.60. This means if the Euro and other “risk” will continue their downward trend, this could further impede gold and silver from rising during the following week.

We guess gold and silver could resume their upward trend especially if the minutes of the FOMC meeting and Bernanke’s speech will contribute to the speculations that the Fed could consider additional monetary steps in the near future and if the U.S economy will continue to show little progress. In this regards, the upcoming reports regarding the U.S economy include the U.S non-farm payroll report and manufacturing PMI; they could pull up precious metals rates if these reports will show little growth. This, in turn, could raise the chances of Fed loosening up its monetary policy by raising the target inflation or intervening in the forex market or pegging the long term yields to a low rate or other.

On the other hand the uncertainty around Europe could curb the bullion rates’ rally: If the ECB will lower its rate again this could pull down the Euro. The progress in Europe including the budget issues in Spain and Greece are likely to keep the volatility high of the Euro. Until Spain will make the formal request to start the ECB bond purchase program, this is likely to keep pulling down the Euro, which means other “risk currencies” and commodities prices are likely to follow. If China will introduce additional measures to jump-start its economy, this could also help rally commodities rates. The appreciation of the Indian Rupee is likely to raise the demand for gold in India, the biggest importer of gold. Finally, if the Euro, Aussie dollar, Canadian dollar and other exchange rates will continue to trade down against the USD, this could also adversely affect the bullion rates.

Key Technical Area: Gold support is at $1761 and $1741. Resistance is $1792 and $1826. Silver support is at $33.57 and $33. Resistance is at $34.60 and $35.20.

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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