Business Letter

Gold Price Update

Gold gets lift after a bearish week

Gold futures jumped in Asia electronic trades today with the metal getting some lift after falling hard last week as the metal faced some technical selling pressure.

Last week, gold futures retreated 2.15%, the biggest weekly decline since mid-June. The contract lost 0.4% for the month, the second consecutive monthly decline. Gold may find near term support near $1710 levels with resistance near $1735 levels.

Gold futures ended Friday’s session down nearly 1%, as market players continued to monitor negotiations among U.S. lawmakers to avoid the looming “fiscal cliff” crisis.

Today, gold futures for February delivery are trading up $83 at $1721 per ounce on the Com-ex division of the New York Mercantile Exchange.

Concerned with the drastic depreciation in the Indian rupee against the greenback raising alarm bell for decision makers, the Standing Committee of the Reserve Bank of India (RBI) on gold is meeting on Monday to take immediate measures to discourage import of yellow metal. Gold is seen as unproductive asset causing monitory management issues.

Committee is considering issue of bond which may offer returns linked with the gold price. Other possible measures could be a quantitative restriction on gold hoarding by Indian corporates and other large institutions including depositories. Gold bought by ETFs remains with the depositories unused.