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Monday, February 09, 2009

Gold still lower, $900 acting as key

Local futures drop too as traders anxiously watch Rs 14000 mark

Gold extended its drop today, falling for a second day in a row as traders continued to back off given the strength in the global equity markets and a firm undertone in the US dollar. The sharp run of gains in the yellow metal also provided an impetus for profit booking after the yellow metal hit five-month highs last week.

Meanwhile, the global equity markets rose Monday, helped by hopes for the quick passage of a large U.S. economic stimulus package. The US dollar also continued to trade in a positive manner, though it gave away some of its recent gains in the mid London trades.

However, the near term outlook for the dollar might still be bullish given that the sentiment among euro zone investors unexpectedly worsened in February after having improved at beginning of the year. The Sentix research group's monthly index of investor morale in the 16-nation euro zone fell to -36.1 in February from -34.4 in January.

Gold fell to a low of $901.20 per ounce, before witnessing a quick rebound as the watermark $900 threshold swung in the action. The COMEX April contract was hovering at $904.70, down nearly 10 dollars from the previous close when last seen. The commodity had dropped from its five-month highs on Friday as the rising risk appetite in the global asset markets acted as a trigger for the investors to liquidate their gold longs at higher levels.

MCX April Gold futures are trading at Rs 14041 per 10 grams, down Rs 140 or 1.54% from the previous close. The counter had come tantalizingly close to the critical Rs 14000 mark in the intraday trades and a break below is expected to lead to further declines with the intraday sellers upping the ante.

source: Capital Market
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