Gold Outlook

08-AUG-2011

Technical

R2=1685.59

R1=1673.24

PP=1657.62

S1=1645.27

S2=1629.65

Gold Tops $1,715 for First Time as U.S. Rating Cut Boosts Demand for Haven Gold is currently trading at an all time high of $1715.00 levels. Gold surged to a record after Standard & Poor’s cut the U.S.’s top credit rating for the first time, fueling a slump in equities and the dollar amid increasing concern that the global economy is slowing.However, a short term price fall is expected as gold is trading above the upper Bollinger Band and is likely to fill the gap left behind. It is therefore suggested to stay cautious on the higher side and wait for dips. However, a short term price fall is expected as gold is trading above the upper Bollinger Band and is likely to fill the gap left behind. It is therefore suggested to stay cautious on the higher side and wait for dip immediate support at $1685 and $1672 resptvly.It appears that gold is the only trustworthily safe asset when US debts are downgraded and world central bankers have begun another round of easing. S&P cut the US' debt rating by one notch to AA+ and kept its the outlook at 'negative' after market close on Friday. The agency said the downgrade reflects that the fiscal consolidation plan that agreed earlier in the month falls short of what 'would be necessary to stabilize the government's medium-term debt dynamics'. A downgrade to AA with 2 years is possible of spending reduction turns out to be lower than expected, higher debts due to 'new fiscal pressures' or interest rates increase. Moody and Fitch currently keep US' AAA ratings unchanged but said downgrades cannot be ruled out if the economy deteriorates and fiscal consolidations fail to take it effect. S&P's downgrade pressured the US dollar, thus supporting gold.

By M Zohaib Gadit