By Prijath Babu

International spot gold ended with positive note and close near $1665.90 per troy ounce registering 1.91 percent gains for the week. However Indian gold had shown slight divergence with international gold prices and ended with slight negative note posting 0.8 percent decline in the weekly prices. The divergence might be short term phenomenon and the probable reason for this might be the hedging commitment by the physical traders against the weak rupee and sudden recovery of rupee against dollar had changed the market dynamics. Investors are cautiously watching the developments in Greek debt restructuring who are ready to opt for second bailout plan. Gold demand from East Asian countries dropped since the most of the market closed for lunar holidays.

International spot gold likely to remain firm, since the support at $1665 level holds the key for further strengthening of the recovery rally. Strong penetration of 1672 levels can foster strong move towards next resistance at 1690/1701 levels. The crucial strong support at 1640 levels, any breach below this negates the undergoing bullish moves in the counter with next support at 1625 levels.  The world largest exchange traded fund, SPDR total net asset value stood at 1255.67 tonnes marginally higher compared with previous week rate at 1254.15 tonnes.

Technical Outlook for the week ( Feb Contract)

Crucial resistance for the week at 27670 levels. If prices break above these level can trigger strong bullish move towards next resistance at 27970/28200 levels. However price has to stay above 27450 for strong confirmation of this possibility. Direct fall below 27240 will negate the bullish moves in the counter with ensuing support at 26850/26480 levels.

The author is a market expert and can be contacted [email protected]