Weekly Commentary on Bullion

FUNDAMENTAL COMMENTS AND VIEW

Gold is becoming expensive again after the International Monetary Fund (IMF) warned that the global recession could last longer than expected. Forecasts for the current year are already pessimistic and there are fears 2010 could also be problematic. This might be prompting global investments in gold, which is considered one of the safest avenues of investment in times of economic distress and uncertainty. The International Monetary Fund calculates global losses tied to bad loans and securitized assets may reach $4.1 trillion next year. It estimates banks face further writedowns of $550 billion in the U.S. and $750 billion in the euro area

China Government has declared that it has bought 454 tonnes of Gold for its reserves since 2003 to 2008 and current Gold reserves stand at 1054 tonnes, making it fifth largest Gold reserve in the world. China's gold buying has been rumored for years, but the country stayed quiet so as not to limit its ability to find favorable prices.

The world leader in gold reserves is United States with 8133 tonnes as on September 2008 that accounts for 76.5% of its foreign exchange reserves. Germany has the second highest gold reserves at 3412.6 tonnes while IMF has 3217, France has 2508 tonnes constituting 58.7% of its forex assets. Italy has 2451.8 tonnes constituting 61.9% of forex reserves followed by Switzerland at 1040 constituting 23.8% of total forex reserves. India is way down at 14th position with gold reserves of 357.7 tonnes representing 3% of total forex reseres.

What's really pushing gold higher is India's buying festival and continued jitters about U.S. banks' stress test results. Around 10 tons of gold have already been imported this month. India will import 25 to 30 metric tons of gold in April after no imports in the last two months due to Akshaya Tritya which falls on 27 April 2009.

TECHNICAL VIEW

COMEX Gold has support at $890 and resistance at $920 and $935. Prices took support at 200 DMA at $860 lat week as suggested. And Prices have sustained above $900 to resume its uptrend.
Buy MCX Gold (Jun) above 14700 SL 14500 Tgt 15000

COMEX Silver has support at $12.4 and resistance at $13 and $13.4
Buy MCX Silver (May) above 21250 SL 20800 Tgt 22000