Buy Gold on dips to USD 1643; SL below USD 1628: Geojit

Geojit Comtrade has come out with its trading strategies onGold for the day. According to the research firm, one can buy Gold on dips to USD 1643 for targets of USD 1662/1680 with a stoploss below USD 1628.
Spot gold almost paused overnight in lackluster trades as investors stayed away from taking fresh positions ahead of the key Jackson Hole symposium later the session. More economic stimulate measures are broadly expected in the meeting that strengthen hopes of another round of quantitative easing from US. Fresh economic stimulus from central banks probably lifts inflation outlook and could benefit bullion owing to its inflation hedge appeal. Moves in bullion continue to look towards currencies for direction but the Dollar and the Euro was almost steady as investors worried speculating in currencies ahead the meeting. Chinese Premier Web Jiabao’s positive comment to support the Euro zone and the successful Italian bond auction has put a lid over the worsening Euro zone crisis. However, economic data from US providing signals of a bleak economic outlook with the jobless data that showed more application for unemployment benefit than previously expected in the last week. US customer spending too mounted to a three month high last month. Physical activities on gold from Asian countries remain steady and the holdings of world’s largest gold backed exchange traded fund stay unchanged.
In spite of a breakout above $1640 supplementary moves were inadequate to strengthen the broad positive bias. Auxiliary moves were failed to clear the consolidation resistance of $1680 and slightly pushed down. Looking ahead the consolidation phase is likely to carry on without breaking the immediate support of $1648. Enduring candlestick formation suggests chances of fresh upside providing the 200 day moving average support of $1641 held the downside. Falls below $1640 with volume is required to trigger fresh sell off till $1617/1600 even such moves are least expected in a short run. Though, reversal of the current bullish outlook is expected only a break below $1606 with volume. Currently gold and the Euro are highly correlated with the correlation placed above 0.90. Volumes almost silent and RSI paced at neutral zone.
Trading strategies

Key levels for the day: Upside: 1680 followed by 1696/ 1720. Short term 1762

Downside immediate: 1642/1617/1600-1596 regions and then 1582.
Buy on dips to 1643 target 1662/1680 SL below 1628.
Buy above 1682 target 1720 SL below 1660. Buy on dips to 1617 target 1643 SL below 1605.
Buy on dips to 1588 target 1612 SL below 1580. Sell if unable to clear 1682 target 1632 SL above 1700.
Sell below 1632 target 1606 SL above 1645. Sell below 1578 target 1562 SL above 1586.
Prices are likely to move higher after taking an initial dip.
MCX Oct: Intraday Levels are: Resistance at 30940/31000/31180 then 31600. Supports: 30730/30350/30120
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Market Commentary

Ø Gold opened lower at 1604.25/1605.25, pushed down by a stronger dollar overnight. We appear to be stuck in the summer doldrums as the metal is experiencing range bound trading in a low volume market as investors wait upon news to give direction. Gold reached an intraday low of 1603.50/1604.50 shortly after the open and gained to an intraday high of 1616.50/1617.50 midmorning. Gold remained near the high end of its range for the remainder of the day as equities made small gains. The metal ended the day at 1613/1614.

Ø Depressed prices in base metals and crude saw silver open lower at 27.78/27.83 and reached its intraday low of 27.74/27.79 quickly after. Following a renewal in crude, silver reached an intraday high of 28.24/28.29 midsession. Light profit taking took the metal to its close at 28.10/28.15 in quiet trading.

Technical Commentary

Ø Gold closed nearly unchanged today at 1613, the 3rd consecutive day of very lackluster trading. The range of 1585 to 1629 continues to hold, and the ADX, a measure of trend, is very low at 11.70.

Ø Silver closed nearly unchanged at 28.10. Like gold, silver is showing no trend momentum with ADX well below 20 (currently at 13). We continue to watch the 28.40-level on the upside and 27 on the downside. The Gold-Silver ratio is trading slightly higher at 57.46 but remains vulnerable to the downside, with support at 57.00.

Technical levels for 9^th Aug, 2012:

Metal	Support ($/oz)	Resistance ($/oz)
Gold	1605.55	1619.14
Silver	27.714	28.317

Economic Calendar:

Date		Economic Indicator	Country	Actual	Forecast	Previous		Effect & Remarks
9th Aug	Trade Balance		US	Pending at 6:00pm	-47.4B		-48.7B	If Actual > Forecast = Good for currency. Difference in value between imported and exported goods and services during the reported month.
9th Aug	Unemployment Claims		US	Pending at 6:00pm	371K		365K	If Actual < Forecast = Good for currency. The number of individuals who filed for unemployment insurance for the first time during the past week.
8th Aug	Prelim Unit Labor Costs q/q		US	1.7%	0.5%		1.3%	As Actual > Forecast = Good for currency. Annualized change in the price businesses pay for labor, excluding the farming industry has Increased.
8th Aug	Crude Oil Inventories		US	-3.7M	-0.6M		-6.5M	As Actual < Forecast = No consistent effect - there are both inflationary and growth implications. Change in the number of barrels of crude oil held in inventory by commercial firms during the past week.

Disclaimer: -

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