MAJOR HIGHLIGHTS

Yesterday, ECB and BOE left their key interest rates unchanged at 4.25% and 5% respectively.

As per U.S. economic data released yesterday, the number of Initial Claims filed in the week ending August 30 increased by 15,000 to 444,000.

The ISM's service index rose to 50.6 in August, up from the 49.5 reported in July, US commerce department reported yesterday.

MARKET ANALYSIS

Gold prices ended below $800/oz yesterday, lowest in last three weeks, as soaring USD and weak oil prices are weighing on bullion prices. Spot Gold prices were down by 0.83%, to close at $793.30/oz.

In currency market, USD extended its gain against Euro. Euro has tumbled to its lowest levels for this year, after ECB President Jean-Claude Trichet said that region is in “episode of weak activity”. US dollar index was up by 1.06%, to close at 78.92.

In energy market, crude Oil prices ended lower on account of falling U.S. demand and rising U.S. dollar against major currencies. Crude oil prices were down by $1.81, to close at $107.53 a barrel.

In other metals, Silver prices followed suit. Spot Silver prices closed at $12.83/oz, down by $0.16. Platinum prices ended lower, tracking lower gold prices. Comex October Platinum prices closed at $1392.2, down by 0.80%.

OUTLOOK

Gold prices may rise on account of technical buying, but underlying sentiment is looking bearish. It is expected to trade lower in the short term, as rising USD and weak oil prices can outweigh strong physical demand. Today, USD will take cues from US employment data. With Euro zone indicators showing weakness in European economy, dollar is likely to gain further against major currencies and this can curb the upside in gold and silver. In coming week, Gold prices can test $ 770/oz on the lower side.

We maintain our long term bullish outlook on precious metals, as rising physical demand from Asian countries can stem the downside. Platinum prices are expected to trade sideways, due to fall in demand from auto sector.

Spot Gold has support at $784.80/$776.30 levels whereas resistance is seen at $808.30/$818.80 levels. Spot Silver prices shall find support at $12.50/$12.25 levels whereas resistance is seen at $13.10/$13.40 levels.

MCX October Gold has support at 11480/11405 whereas resistance is seen at 11630/11710 levels. MCX December Silver shall find support at 19714/19465 whereas resistance is seen at 20205/20360 levels.

Courtesy: Angel Commodities