However, the extension of such correction is least expected beyond $1301. Meanwhile, the broad picture requires a close above $1343 for bigger rallies targeting $1354/1368, followed by $1382 levels.
MUMBAI: Spot gold eased following encouraging US economic releases that showed the world’s largest economy pointing to momentum after a turbulent start to the year. The US manufacturing activity gained in June and the automobile sales rallied to the highest in nearly eight years painting an upbeat picture for the second quarter. US ISM factory activity in June was at 55.3, a moderate change from May figures and a figure above 50 indicates expansion of the economy.
Meanwhile, escalating worries in Iraq and feeble dollar provided lower level support to prices. Earlier, reports of a possible hike in interest rates by the US Federal Reserve by early 2015 and reports of falsified gold transactions of Chinese gold processing firms affected the investor sentiments. Concerns over feeble physical demand from the top consumer China and sluggish investment demand owing to a shift in investors focus to stronger equities too pressurized prices. Demand from India too seems frail as traders defer buying at current levels on news that a probable rollback of import rules is imminent. In the meantime, investors curiously watch out the outcome of the key events like US Non-farm Payrolls and trade balance data apart from the European Central Bank meeting during the week.
The choppy trading inside the tight range of $1332-1305 levels during the past couple of weeks is likely to endure in the immediate run. Prices are placed at an oversold region and the recent attempts to break the key obstacle of $1332 were unsuccessful, signaling possibilities of a corrective selling in the counter. However, the extension of such correction is least expected beyond $1301. Meanwhile, the broad picture requires a close above $1343 for bigger rallies targeting $1354/1368, followed by $1382 levels. Conversely, an unexpected drop below $1298 could take prices as low as $1276, breaking of the same would be required for major liquidation in the near future.