Weekly View on Bullion

FUNDAMENTAL COMMENTS AND VIEW

Gold has long been seen as a haven against inflation and the Fed’s announcement earlier this week that it is to inject more than $1 trillion into the US economy was well-received by markets worldwide but also fuelled fears of inflation down the road, hitting the value of the dollar and also prompting a surge in gold prices. The US Federal Reserve is to embark on quantitative easing by buying up longer-term Treasuries for the first time as part of a $1.15 trillion spending spree with the aim of reviving the American economy out of recession. FED will buy $300bn of US government securities, it plans to buy up to $750bn of additional agency mortgage-backed securities and double the agency debt it plans to buy this year from $100bn to $200bn. Gold prices spiked again on the back of the US's move to massive qualitative easing measures. Greenback weakness and inflation are two of gold’s friends, when it comes to pricing the commodity.

The FOMC’s decision to keep the benchmark rate in a spread between zero and 0.25 percent wasn’t market moving; but the announcement that they would actively pursue quantitative easing was. While policy officials have given considerable forewarning to such a move, it nonetheless raises concern about the health of the US economy and its assets

With gold so hot at the moment—SPDR Gold Trust, the world's largest gold-backed ETF, yesterday reported that having added 335 tonnes of gold so far this year its reserves have hit an all-time high of 1,114.6 tonnes. We continue our bullish stance on Gold and Silver.

TECHNICAL VIEW

COMEX Gold has support at $945 and $930 and resistance at $980 and $1000.
Buy MCX Gold (Apr) if prices sustain above 15550 SL 15350 Tgt 15800

COMEX Silver has support at $13.4 and resistance at $14.1 and $14.6
Buy MCX Silver (May) on dips around 22600 SL 22300 Tgt 23000 and 23300