Gold, silver in bullish mode

Bulls were on the rampage from the opening to the close in both gold and silver yesterday.

Dec gold futures on Wednesday hit a fresh seven-week high, but the MCX bullion counter was silent because of the rise of the dollar against the rupee.

Gold MCX yesterday hit a high of Rs 8,999 per 10gm and closed at Rs 8,969 per 10gm. Silver closed at Rs 18,584 per kg.

The market looks overbought on the daily charts as silver and gold had higher closes on six of the last seven days.

Profit-taking breaks could be in store despite the overall trend being higher.

The bulls have gained good upside technical strength recently as gold has broken the resistance level of $613.70. Their next major upside objective is to push prices above the strong chart resistance at the $638-650 level.

Gold also appears to have separated from its recent close trading relationship with the crude oil futures market. This has impressed the gold market bulls.

The recent weakening of the dollar against other major currencies has also given a boost to gold.

Gold and the greenback have traded in an inverse relationship for years. The dollar is caught in data nightmare as we see fresh selling pressure at the slightest hint of a decelerating economy.

Poor consumer confidence data and a worse-than-expected October regional business report sent the greenback to one-month lows against the yen and euro.

The dollar awaits today's US ISM data, and the all-important unemployment report due on the first Friday of every month. Expectations are seen as dollar negative for both reports, which are key to pricing interest rate policy changes into the market with crude rate are bouncing back after inventory data yesterday night booted the gold price.

The MCX gold is trading above the 9,000 mark - at Rs 9,017 per 10gm and silver at Rs 18,661 per kg.