19/06/2013
Spot gold inched lower after pausing in a tight range for the last few trading session as investors turned cautious ahead of the key US Federal Reserve
policy meeting and on strong equities. The two day Federal Reserve meeting started yesterday and the policy statement is due later today followed by the
Fed Chairman Bernanke’s news conference. Uncertaintywhether the US Fed will scale back or halt its prevailing $85 billion bond buying program snapped
support for gold. Earlier, the US Consumer Price Index showed inflation stabilizing in the country in May after a long decline. Meanwhile, physical demand
for gold from the top consumer India is subdued as the peak marriage season ended and on stringent measures taken by the government to curb imports
due to widening current account deficit. Previously, the Indian government had raised the import duty on gold by a third and restricted gold financing by
banks. Demand from the second top buyer China too seems lackluster. At the same time, investment interest in gold still looks feeble with the SPDR Gold
Trust, the world’s largest gold backed exchange traded fund, falling 0.2 percent yesterday to their lowest level in more than four years.
A flat trading range is being witnessed inside $1398-1358 regions for the last couple of weeks. Enduring chart formation suggests that intraday bias
should largely stay negative. Repeated and successful attempts to edge down below $1358 would take prices lower towards $1320 initially,which if given
away would call for steep fall to $1280/1212 or more. A possible downside crossover in MACD and Bollinger Bands also signifies weakness in the counter.
The 50,100 and 200 week moving averages suggest implied weakness as well. At the same time, inability to break the support of $1358 would call for
choppy trading. A direct rise above $1408 would stretch the trend as far as $1421 but in a broader picture, it requires a close above $1510 for bigger
rallies.
