Report on Gold :: IndiaNivesh, report

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Safe heaven appeal and problem in China & European Union boost gold
demand.


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Overview
On Thursday, Gold bounced back sharply from lower levels after the Swiss National Bank lowered interest
rates further into negative territory. The SNB announced that it will discontinue the minimum exchange of
1.20 per euro, while lowering interest rates further into negative territory, sending the franc sharply higher.
Dollar weakness usually benefits gold, as it boosts the metal's appeal as an alternative asset and makes dollarpriced
commodities cheaper for holders of other currencies. Data on Wednesday showed that retail sales in
the U.S. dropped by the most in 11 months in December, suggesting that the Federal Reserve could keep
rates on hold for longer. A delay in raising interest rates would be seen as bullish for gold, as it decreases the
relative cost of holding on to the metal, which doesn't offer investors any similar guaranteed payout. The
precious metal lost nearly 2% in 2014 amid indications a strengthening U.S. economic recovery will force the
Fed to start raising interest rates sooner and faster than previously thought. US unemployment data fueled
further in yellow metal. The U.S. Department of Labor said the number of individuals filing for initial jobless
benefits increased by 19,000 last week to 316,000, the highest in almost four months. Analysts had expected
initial jobless claims to decline by 6,000 to 291,000 last week from 297,000 in the preceding week. At the
same time, the Federal Reserve Bank of New York said that its general business conditions index increased to
10.0 this month from a reading of -3.6 in December. Analysts had expected the index to rise to 5.0 in January.
On the index, a reading above 0.0 indicates improving conditions, below indicates worsening conditions.
Separately, the Commerce Department said that producer prices fell by a seasonally adjusted 0.3% last
month, compared to forecasts for a 0.4% decline, after falling 0.2% in November. The core producer price
index eased up by a seasonally adjusted 0.3% last month, above expectations for a gain of 0.1% and following
a flat reading in November. On Comex division, Gold spot made a low of $1225.80 and skyrocketed to
1266.80. Technically, Gold finds support at $1225 and resistance at $1270. Weekly close $1240 will take to
1290---1325+ mark in days to come. On seeing daily chart, downside target seems limited but trade with
levels only. Close below $1225 will see further panic till $1213---$1206 and then to $1188. $1180 act as major
support in Gold and unlikely to breach in short terms. On MCX division, Gold has support at 27000---26700
and resistance at 27650. Weekly close above 27650 will see further upside rally till 28050—28300+ mark.
Oscillator MACD and RSI also indicate strength on daily charts but trade with levels only as INR will play key
role in volatility.

USDINR has support at 61.50 and resistance at 62.30---62.80 and currently trading around 62.00. Trend looks
weak in USDINR and could test 61.50. Weekly close below 61.50 will see further panic in USDINR till 60.70—
60.30 mark. INR will appreciate in near terms on growing emerging markets along with it recent rate cut from
RBI will support economy. The Reserve Bank of India on Thursday cut its key policy rate by a 0.25%. With
inflation remaining benign and the economy yet to show a marked improvement, the central bank is expected
to make credit easier going forward for consumers and corporate. On Thursday, the RBI said further easing
would depend on data that confirm disinflationary pressures, "high-quality" fiscal consolidation and moves to
ease supply of power, land, minerals and infrastructure. On other hand, Dollar index rise sharply after rate cut
from Swizz National bank but recent weak data from the house of US pressured Dollar index also correction
due in it technically which helps to support bullion specially Gold as a safe haven investment.

Recommendation
Traders can buy and accumulate Gold in panic around $1240 INR 27250---27050 with strict stop loss below
$1214 INR 26700 for the initial target of $1290---$1325 INR 28050---28300.

LINK
http://www.indianivesh.in/Admin/Upload/635574289727322500_Report%20on%20Gold-%20Feb%202015.pdf