Gold Dip Below RM118/g - A Good Entry Point

Yesterday Gold price dip below 100DMA to USD1160 per Oz, this level is a good entry point to invest into gold market. Gold market have been manipulate dip below 100DMA to cause any weak gold holder to sale out they gold before a big rally to USD1,300 by 4Q2010.

Usually August and September, demand on gold is high so dip now on July to accumulate. However gold price 916 in Malaysia still sale at RM143 per g, this level is when gold is RM125 per g international rate. Demand response from the physical market remains one of support rather than resistance.

Federation of Goldsmith and Jewellers Association of Malaysia keep this rate to maximum the profit because they know people still buying gold in this rate and international gold price is been manipulate down not because of not buyer.

US Libor is starting to decline - a bullish development for Gold

Gold is back at $1,200 after waves of buying in New York Friday pushed gold from $1,185 to $1,202 in just hours. But gold remains within its recent trading range between $1,210 and $1,180, and this may continue as we head towards options expiry next week Thursday. There is large volume of options with strikes at and around $1,200. Despite gold touching $1,200, physical buying interest remains in place which, for now, supports gold on approach of $1,185.

In the US, report are witnessing a positive development. Unlike in Europe, US Libor is starting to decline. After reaching a high of 0.539% in June, 3m Libor has declined steadily to below 0.50% yesterday. This is not a big move yet but a move in the right direction nevertheless. Investor view a decline in LIBOR (London Inter-Bank Offer Rate) as a bullish development for Gold.

Furthermore, we find confidence in the strength of EM currencies which indicates that risk appetite for precious metals may remain firm.

Gold support is at $1,186 and $1,173, while resistance is at $1,206 and $1,213.

USD1,215 continues to represent nearby resistance for gold

Improved corporate performance and forecasts from the likes of Alcoa and BMW - forecasting a 10% increase in sales - have boosted the global equity markets and have seen the dollar weaken during the morning, offsetting a much weaker than expected ZEW Survey of German Economic Sentiment. The weaker dollar has helped gold and the PGM’s to rally, while the PGM’s also appear to have received an additional boost from the BMW figures.

In addition, a reduction in Portugal’s credit rating to A1 from Moody’s served as a reminder to the market about Southern Europe’s debt issues and also appeared to lend support to gold prices, albeit with little lasting impact on the Euro. As noted in recent reports, $1,200/oz again appears to be the approximate floor for gold prices, though volumes overnight were pretty light. $1,215 continues to represent nearby resistance for gold.

Improved expectations of car sales from European manufacturers - boosted by a weaker Euro - has boosted sentiment towards the PGM’s, with vehicle sales post the various scrappage schemes continuing to be a key signal in terms of PGM demand and an important source of support for prices.

Still see healthy demand for gold in the physical market

We still see healthy demand for gold in the physical market. At the same time, gold scrap sales have dried up. With the support for gold from the physical market in place (refer to Focus), there is growing resistance to a move lower in the gold price.

That said, we would not be surprised to see more gold liquidation from the investment front this week. We therefore still see short-term momentum as down.

Support is at $1,190 and $1,184. Resistance is at $1,206 and $1,218.