Commodity Trading Tips for Gold by KediaCommodity

Ajay Kumar Kedia 8 January 2014

Gold Gold settled down -0.48% at 28834 lower after official data showed that the U.S. trade deficit narrowed to a four-year low in November, which bolstered the dollar by fanning speculation that the recovery will remain strong enough to prompt the Federal Reserve to continue withdrawing support through 2014. Demand for the greenback jumped after the Commerce Department said the U.S. trade deficit narrowed to USD34.25 billion in November from a revised deficit of USD39.33 billion in the previous month. Market were expecting the U.S. trade deficit to widen to USD40 billion. US exports rose 0.9% to a record high of USD194.9 billion, while imports fell 1.4% to USD229.1 billion. Investors applauded the data, which weakened gold, but remained cautious ahead of the release of the Federal Reserve’s December meeting minutes on Wednesday as well as Friday’s U.S. December jobs report, with many eager to see fresh indications on the possible timing of further Fed stimulus tapering. The Federal Reserve is currently buying USD75 billion in Treasury holdings and mortgage debt a month to spur recovery by suppressing long-term borrowing costs, which weakens the dollar as a side effect. Talk of cuts to the stimulus program tends to bolster the dollar and weaken gold. In the Asian physical market, Indian officials are in talks to cut a record high import duty on gold and relax rules on exports, government sources said. The measures helped narrow the trade deficit, but now threaten to encourage smuggling. Traders will now focus on U.S. non-farm payrolls and trade numbers on Friday, which will be preceded by Wednesday's minutes of the Federal Reserve's December policy meeting. Technically market is getting support at 28738 and below same could see a test of 28641 level, And resistance is now likely to be seen at 28996, a move above could see prices testing 29157.