Notes By Mr. Amog

Last trading session has been very bad for global markets, including commodities. The EUR breached the 1.3 mark v/s the dollar, a level not seen in past 11 months. Clearly markets are indicating that the Euro zone crises is still not out of the way. The CRB commodity index was down 3%, gold is now trading at $1575 – sign of risk off sentiment. The key reason for the same is the $ rally which has got all commodities reeling under pressure, including gold….            

The good part for Indian investors is that in Rupee terms, gold is still holding on as depreciating rupee boosts the value of gold. Hence we haven’t seen as much carnage in gold when priced in INR. Last 1 month gold has fallen nearly 12% in $ terms, but less than 2% in INR terms

The outlook for gold in $ terms continues to be on the downward side as it technically poised for some more selling. This is the 1^st time since Jan 2009 gold has broken the 200 DMA (daily moving average). The attempt will be to pull up back to the 200 DMA levels, but near term momentum remains weak. However, the view is that INR would continue to remain under pressure, so to that extent the rupee value of gold is not likely to be as impacted despite the steep $ price correction in gold (as I write INR has breached the 54 mark !!!!).Overall, near term remains cautious, but given the spectacular performance of gold as an asset class, some period of correction / consolidation was warranted –and this is one such phase we are witnessing

Good days for gold are not over – just taken a breather.