Fresh buying seen in Gold, support at 28998

Mumbai-India (Feb 12)   Gold settled up 0.58% at 29104 as support seen after incoming Fed Chair Yellen made it clear she would not make any abrupt changes to the central bank's commitment to a measured tapering of bond purchases. A string of disappointing U.S. data had prompted speculation that the Fed might hold off further reduction of stimulus, which had strongly supported gold by keeping interest rates at rock bottom while stoking inflation fears. Yellen's testimony comes at a tricky time given two months of soft employment growth and as a deadline looms on raising the U.S. government borrowing limit before a possible debt default.

Investors, however, continue to regard these macroeconomic events as insufficient to derail the global recovery, which makes the investment case for gold, usually seen as a safe haven in times of trouble, still unattractive. In the physical markets, Chinese demand eased due to the gains in prices. Premiums for 99.99 percent purity gold on the Shanghai Gold Exchange eased to $7 an ounce from $12. India's trade ministry said it has recommended easing curbs on gold imports, after a 77 percent drop in imports for January that helped narrow the country's trade deficit. India had imposed curbs last year including a record 10 percent duty to discourage gold purchases. Speculation that the Fed might hold off further reduction of stimulus had strongly supported gold by keeping interest rates at rock bottom while stoking inflation fears.

Technically market is under fresh buying and getting support at 28998 and below same could see a test of 28892 level, and resistance is now likely to be seen at 29192, a move above could see prices testing 29280.

(Source:  Commodity Online)