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S. Subramanium

Apart from dollar, the precious metal is seen gaining support from falling production in South Africa. —

M.R. Subramani

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Chennai, June 22 Though gold gained last week, it did show signs of weakness during the weekend.

Gold slipped during the weekend, despite the dollar weakening, as profit booking set in. The yellow metal finally settled at $901.35/902.75 an ounce.

Despite the rise, it failed to go higher than the high witnessed during the previous week.

Had it done so, it would have really turned bullish. Nor is the precious metal showing signs of getting near $940 an ounce, witnessed a month ago. These give room for suspicion that things have not improved yet for it.

According to Standard Bank, there is still a downside potential to gold. Angel Broking sees the downside limited, as the Fed is seen not increasing interest rates in its meeting on June 25 and most economists expecting the central bank to keep its benchmark rate steady at 2 per cent. If that happens, then the dollar may find it difficult to sustain its current rally and a weakening dollar can lend support to bullion prices.

Apart from dollar, the precious metal is seen gaining support from falling production in South Africa.

Though short-term indicators have improved, a long term weakness is seen for gold. However, it is seen well supported at $900. Below this, it can see help coming at $894 and $882.

If the yellow metal goes below $850, then it is definitely negative. Angel Broking sees support coming at $870 and below that at $848.

Resistance for the precious metal, according to Standard Bank, is seen at $912 and then at $919. Beyond that gold could surely come under pressure at $932. If it manages to get past $940, then things could turn positive for the yellow metal. Angel, on the other hand, sees stiff resistance for gold at $920 levels.

There are certain facts that point to speculators seeing the prices slipping in the near term. The non-commercial holdings by speculators have declined to 46 per cent from 48 per cent. On the other hand, commercial holdings by commercial hedgers have increased to 72 per cent from 70 per cent. Analysts are of the view that gold stands to gain in view of concern over inflation. With crude ruling firm and signs of tension between Israel and Iran, the yellow metal could stand to gain.

In the domestic futures, according to Angel, MCX August gold could expect support at Rs 12,210 for 10 gm and below that at Rs 11,860. Resistances are at Rs 12,760 and Rs 12,960.

Crude Oil: Crude oil, despite the efforts to hold the price line and raise supply, could test $150 a barrel by the end of the year.

However, in the short-term it could see some pressure, especially on the heels of Sunday’s meeting in Dubai. The MCX July contract is expected to face resistance at Rs 6,130 a barrel and support on a fall could be seen at Rs 5,450.

Metals: The current rise in copper price is seen a short-term one and on technical grounds.

But the prices are expected to rule firm on hopes of pick up in demand in China. However, according to Angel, copper prices are expected to trade around $8,400-$8,600 this week.

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