| Gold futures corrected on Wednesday on profit-booking after hitting an overnight high of $933.30 an ounce, ahead of an announcement on interest rate by the US Federal Open Market Committee (FOMC) early on Wednesday. |
| A widely expected 50-basis-point cut could take the yellow metal to new highs between $935-$960, while a quarter percentage cut or no cut at all could see gold dipping below $900 levels, according to analysts and bank dealers. |
| "There is a bearish divergence forming on (technical) charts, but we can't be sure just yet," said Krishna Kumar Nathani, managing director and chief executive, India Bullion Investor Services, a research and advisory services firm in Chennai. |
| Nathani was of the view that a break below $919 could see gold going to $908, and then to $903. |
| However, he added, there is no sign yet of a trend reversal, and suggests buying on dips. |
| "I would suggest intraday buying below $908 with stops below $900 for a target of $935-945," said Nathani. |
| A dealer from a public sector bank said spot gold could correct to $875-$880 in the event of a 25-basis-point cut or if rates were left unchanged by the US central bank. |
| However, there could be fresh buying and a renewed rally from those levels, the dealer said. |
| A 50-basis-point cut could take gold to its immediate resistance of $945.50, a break out from which could initiate a further rally to $950-960, he said. |
| "Intra day, buying could be initiated below $920 with stops at $905-910 for a target of $935-940," said the dealer. |
| At 4:21PM, COMEX gold February was at $922.90, down $2.20, while spot gold was at $924.10, down 70 cents. |
| "The fundamentals for gold are extremely bullish and I do not expect a major correction until gold tests $953," said Pranith Kumar Tungura, senior analyst, India Bulls Commodities. |
| In the short-term, a dip below $914 would induce a lot of buying, Tungura said. |
| "I suggest buying below $914 with a stop loss according to daily settlement below that level for a target of $953," said Tungura. |
| Silver also corrected after hitting a new 27-year high of $16.81 an ounce. |
| At 4:50PM, spot silver was flat at $16.74, while COMEX silver March was flat at $16.80. |
| Silver is bound to take cues from gold, and will rise or fall in tandem with the yellow metal, analysts said. |
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