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G. Chandrashekhar

No guidance from Bernanke blamed for dull trading

Mumbai Aug. 29

In the absence of external catalysts providing a clear direction, gold has remained capped amid its recent ranges.

After trading at $621.25 an ounce (London cash price) on Friday, the yellow metal remained range-bound. Early trades on Tuesday were at $617/oz. Choppy trading was the notable feature. One of the major reasons for dull trading conditions was that contrary to expectation of comments on current economic conditions, there was no guidance available from the Federal Open Market Committee Chairman, Mr Ben Bernanke, in his talk last Friday on global economic integration.

Whether or not the Fed's tightening cycle has come to an end is still a matter of conjecture. Therefore, the market is widely expected to trade sideways, at least until some price impacting development takes place. Technicals too point to further sideways movement for gold. Experts say that after prolonged inactivity, prices are unlikely to break off their recent ranges until the vacation season has ended (in the western world). Chartists expect gold to trade within the $608-656 an ounce range, finding immediate resistance in the $630-633 area.

The domestic market reflected international conditions. However, it is clear demand for the yellow metal has turned sluggish despite seasonal factors. Any marked spike in prices from the current levels is likely to further weaken offtake.

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