Gold prices fall second day on dollar strength

Published on February 24, 2010 16:05:00 IST

Spot Gold prices slipped yet again for a second consecutive day as strength in the dollar made the yellow metal look unattractive for holders of other currencies. The dollar strengthened yesterday as a US report indicated that consumer confidence in the US had fallen to the lowest level since the last 10 months. Consumer confidence slumped to 46 in February as against a previous of 56.5 in January.

Financial markets in the US fell yesterday amidst the decline in consumer confidence and hence, investors were flocking towards the dollar as a safe-haven investment. Concerns over unemployment are also increasing and hence investors are still worried about the pace of economic recovery. Moreover, Federal Reserve Chairman Ben Bernanke’s testimony is scheduled for today and tomorrow. The chairman in his testimony to the Congress on the semi annual monetary policy may put some light on the recent hike in the discount rate of the Fed and also any change in the key interest rates.

However, the speculation of increase in interest rates to increase is cooling as the US economic updates indicate that the Federal Reserve may need to keep the interest rates lower to sustain the economic recovery. The US will release data on new home sales later in the evening today. Forecasts reveal that the home sales may increase. The dollar will take cues from the economic updates and Bernanke’s testimony today. If the dollar strengthens, gold prices may come under pressure.

Gold prices could trade with a negative bias today, taking cues from movement in the dollar and risk sentiment in the financial markets. The dollar is expected to remain strong taking cues from Bernanke’s testimony and economic data releases.

On intraday basis, Spot Gold prices have immediate support at $1094/$1085 whereas resistance is seen at $1108/$1116. Spot Silver prices shall find support at $15.56/$15.33 whereas resistance is seen at $16.00/$16.25 levels.

MCX Apr Gold has support at 16510/16425 whereas resistance is seen at 16640/16720. MCX Mar Silver shall find support at 24600/24370 whereas resistance is seen at 25025/25260 levels.


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