Gold expected to move northward in the coming week

Last Updated: Sat, Dec 08, 2012 18:57 hrs

pGold is expected to move up in the coming week as the European Central Bank ECB cut the Euro zone economic projections for 2012 and 2013 indicating a further interest rate cutppECB expects the euro area economy to shrink 05 per cent this year more than the 04 per cent contraction the bank had predicted in September ECB cut its 2013 forecast to a contraction of 03 per cent from 05 per cent growth and projects expansion of one per cent in 2014ppThere are indications that ECB will cut interest rate from the current 075 per centppThe US Federal Reserve on the other hand will keep low interest rates till mid 2015 and has announced a monthly purchase of 40 billion of mortgage-backed securities till the labour market improves significantlyppBy the end of the year the US will see a series of automatic spending cuts while tax breaks will endpp&ldquoThis combination of spending cuts and tax increases which will take effect if the president and Congress fail to reach a deal on reducing the deficit before year&rsquos end will put pressure on the economy and some even fear another recession&rdquo Kotak Commodity Services said in a reportppCurrently US president Obama is pushing for tax increases while the Republican party is laying emphasis on spending cuts This will put pressure on the dollar which will in turn cause the price of dollar-denominated commodities to increasepp&ldquoGold is expected to move northward next week as major global economies still remain uncertain and an indication for further rate cut by ECB will prove supportive for gold&rdquo said Ajay Kedia managing director of Kedia CommoditiesppThe US Fed is expected to meet on Wednesday and some quantitative easing measures may be announced which will give a a clear indication to gold in the coming weekpp&ldquoBut the rupee is expected to appreciate against the dollar hence the upside for gold on the Indian market remains limited in the coming week&rdquo said Naveen Mathur associate director of commodities and currencies at Angel Broking a Mumbai-based broking firmppAjay Kedia sees support for gold traded on Multi Commodity Exchange at 31880 per 10 grams and resistance at Rs 32560 per 10 gramsppLast week gold on Mumbai spot market also moved down by 149 per cent and closed at Rs 31326 per 10 gramsp

More from Sify: