FED'S END OF EASING PROGRAMS MAY MAKE THINGS DIFFICULT FOR GOLD

Gold remained stable near its one month high- above $1690 an ounce till Wednesday morning. Gold eased on Wednesday, retreating from the previous session's one-month high, as signs of an improving global economy capped investor interest in safe-haven investments. 

Silver jumped above $32.30 an ounce, again at a one month high, as stocks and commodities were broadly flat.

However, by noon, the precious metals market moved down. The metal fell for the first time in the last three sessions, after the European Commission said consumer morale in the euro zone improved sharply in January.

Spot gold fell 0.3 percent to $1,685.54 an ounce by . It did hit a one-month high of $1,695.76 in the previous session but failed to retain upward momentum on lower investment demand and technical resistance. 

The current support level on gold is at $ 1661 and $ 1653 respectively. Gold has not reacted positively on bullish bullion news and does not seem to correlate well with currencies or oil

Gold prices in the spot market were less volatile on Wednesday due to the rise in the risk aversion in the international markets ahead of the US debt ceiling voting. Though gold and silver were moving on a positive note on Wednesday morning, worries over the decision on the US debt ceiling propelled the prices to fall by noon.

As far as China is concerned, demand continues to rise ahead of the Lunar Year Celebration on February 10. In fact traders have already stocked up for the holiday demand.

In India, appreciation in the rupee forced downside pressure on the gold prices.

Moreover in India, the market for physical gold remains quiet due to the increase in duty on gold. The Indian government lifted the import duty on refined gold to 6 percent from 4 percent and more than doubled the import duty on gold bars and ores. 

The government's move to hike the customs duty will have a loud impact on the Bullion sector. The hike sums up to around INR 60,000 (approx) per kilogram of gold. To be clear, with this duty hike a difference of 7 percent between the international and domestic price of the yellow metal is evident.

This may lead to rise illegal channels and malicious activities with respect to importing gold and related products like jewellery etc., in the country and also adversely affect the jobs of skilled artisans and local jewelers.

The government should harness the existing reserve of gold in our country rather than turning towards imports and implementing this alarming hike on customs duty. Also other opportunities for revenue generation, like increasing exports should be explored by the government of India.

Friday being Eid and Saturday being Republic Day, domestic markets were more or less stable.

Demand in the physical gold market remained strong in most of Asia, but buying by major bullion consumer India was expected to pause in the next few days while the government provides details on tax changes this week.

Meanwhile, the further talks regarding the US debt ceiling and the spending cut may influence precious metals prices in the weeks to come.

The current support level on gold is at $1661 and $1653 respectively. Gold has not reacted positively on bullish bullion news and does not seem to correlate well with currencies or oil

Gold investors were looking ahead this week to a heavy schedule of economic indicators, including gross domestic product, the Institute for Supply Management Manufacturing Index and the January employment situation report, among others.

1st FOMC MEET OF 2013 MAY CREATE WAVES IN THE BULLION MARKET

Gold and silver were on an upward trend during most of the last week. The speech addressed by Mr., Bernanke did not create much impact in the market. Now most traders and investors are waiting for the next FOMC meeting at the end of January. All eyes will be glued on the Fed's decision to adjust its policy.

Gold ended at $1687 per ounce at the end of the week and silver increased by an average 3.83 per cent this reaching $31.56.

Gold and silver prices were mainly affected due to the data published last week, namely China GDP growth, US retail sales, US jobless claims and many more. The Chinese GDP growth data and the US economic progress report may have contributed to the rally of commodities.

The same trend is continued to expect this week. As mentioned before, gold and silver price volatility will be dependent on the first FOMC meeting of 2013. The meeting might show if the FOMC is planning to slowdown its monetary expansion.

Moreover, the QE3 program is starting to have some positive effect on the prices of gold and silver. The uncertainty around future steps U.S policymakers will take vis-à-vis spending cuts and debt ceiling could keep contributing to the rally precious metals in the coming weeks. 

Bullion traders could also be affected by the EU summit. Demand for gold in India may be positively affected if the Indian Rupee will continue to strengthen against the dollar. These factors could potentially keep the pressure on the U.S. dollar to the downside, while possibly making gold and silver coveted safe haven assets for investors.

But as I stated last week, the main metal that has caught the glimpse of the investors is 'Platinum'. Platinum remained in the limelight after news abut production from the world's largest platinum miner pushed prices to their highest levels since early October. Outlook for the platinum group of metals is bullish in general and the news of supply disruption has added the price positive side of platinum

Given the 8.5% rise in the white metal since end of December, several market watchers said a pullback is likely, but that the bullish backdrop for platinum makes a drop in price a buying opportunity.

Gold, meanwhile, has meandered for this year, but with the gains in platinum and the yellow metal’s ability to hold support in the $1,660s an ounce area, market watchers said gold could be ready to rally if it can decidedly break through stiff resistance at $1,700. Gold should see resistance at the 55 DMA of 1697, followed by the psychological 1700 mark and more importantly the 1707 bear trend channel established since the beginning of October 2012. Support comes in at around 1675, the most recent uptrend channel and 1667.50, the 200 DMA.