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					    22 July, 2011                                                     Bullion Daily
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         FOR PRIVATE CIRCULATION ONLY                                                                                                      22 July 2011


                                     Gold                                                                              Silver
                                 MCX India                                                                         MCX India
   Contract         Open         High           Low        Close     Change          Contract           Open       High           Low           Close    Change
     Aug-11        23138        23167       22861         22893        -216            Sep-11          59420      59935         57775           58075      -1104
     Oct-11        23438        23460       23177         23205        -196            Dec-11          60700      61065         58909           59203      -1102
     Dec-11        23732        23750       23460         23489        -191            Mar-12          62000      62154         60110           60532       -903
     Feb-12        23995        24060       23801         23870        -124            May-12          62850      62850         60999           62146        914

                     COMEX (Most Active) As on 21-Jul                                                    COMEX (Most Active) As on 21-Jul
   Contract         Open         High           Low        Close     Change          Contract           Open       High            Low           Close    Change
     Aug-11        1601.9      1605.0       1584.9        1587.0       -9.9           Jul-11           4011.0    4037.5         3886.0          3894.7      -61.1
     Oct-11        1603.3      1606.0       1586.0        1588.1       -9.9           Sep-11           4022.0    4032.5         3893.5          3896.9      -61.2
     Dec-11        1603.9      1606.9       1587.1        1589.1       -9.9           Dec-11           4019.5    4019.5         3896.8          3896.8      -61.0
     Feb-12        1603.6      1608.2       1589.9        1590.5       -9.9           Mar-12           3895.6    3895.6         3895.6          3895.6      -60.9
     Apr-12        1607.9      1608.0       1590.2        1592.0       -9.9           May-12           3993.0    3993.0         3894.3          3894.3      -60.9



                                                                                  Gold Means                              Silver Means (Indicative)
         London Gold Fixing              London Silver Fixing                 (Gold Forward Rates)                       (Silver Forward Mid-Rates)
          USD    GBP      EUR           USD    GBP        EUR          1m       2m     3m     6m        12m       1m         2m      3m       6m          12m
    AM 1600.5     992.44    1131.1      39.78   24.6087    28.0635   0.26333 0.273    0.285    0.342   0.427    0.16333 0.1517         0.1467    0.085   -0.0367
    PM    1601    985.11    1117.2                                                                                                          source:lbma.co.uk



                                                                                                                            Major Currencies
     Highlights
                                                                                                           Currency             Type            Quote      % Chg
          •      COMEX gold trades in a narrow range Friday after 0.6% slide      USD Index     Spot     74.659                                              -0.75%
                 yesterday
                                                                                  EUR USD       Spot      1.422                                              0.42%
          •      Dip in safe haven demand weighs on gold prices
          •      The US dollar index trades marginally higher today after 1%      USD INR       Spot     44.445                                              -0.09%
                 slide yesterday                                                  USD JPY       Spot      78.71                                              -0.49%
          •      Asian equity markets trade higher after sharp gains in US
                 yesterday
          •      Euro-zone leaders struck a deal on a second bailout package for Greece
          •      US initial jobless claims rose by 10000 to 418000 in the week ending July 16
          •      US Philadelphia Fed manufacturing index rose to 3.2 in July from -7.7 a month ago
          •      US index of leading economic indicators climbed 0.3% in June after 0.2% rise last month
          •      German flash manufacturing PMI fell to 52.1 in July, from 54.6 June
          •      Euro zone Composite PMI fell to a 23-month low of 50.8 in July
          •      Gold holdings with SPDR ETF fell by 3.33 tonnes to 1242.678 tonnes
          •      Silver holdings with iShares ETF rose by 45.46 tonnes to 9849.17 tonnes
          •      The spot gold silver ratio stood at 40.43 on Thursday as against 39.92 a day earlier
          •      Focus today on Euro-zone industrial orders and German IFO business sentiment data

     Market Analysis

     COMEX gold trades in a narrow range Friday after a 0.6% slide yesterday which marked its third
     consecutive decline. Gold has failed to resume its upward momentum after hitting a record high level of
     $1610.7/oz earlier this week.

     Gold had gained over $100/oz over last few as uncertainty about health of US and Euro-zone economies

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    22 July, 2011                                  Bullion Daily
     amid debt problems raised demand for safe haven assets.

     Gold has retreated from recent highs as progress in EU and US debt talk sapped demand for safe haven
     assets leading to some profit taking.

     Profit taking is also evident from drop in ETF holdings. Gold holdings with SPDR ETF fell by 3.33 tonnes to
     1242.678 tonnes. This is the second drop in holdings this week.

     Optimism in the market is also evident from rise in equity markets. Asian equity markets trade higher
     today tracking gains in US markets yesterday. US DJIA index gained 1.2% yesterday.

     Optimism rose after EU members took a step forward to deal with the debt problems engulfing regional
     economies. EU members agreed on second bailout package for Greece and took steps to reduce the debt
     burdens of Greece, Portugal and Ireland.

     As per reports, the deal includes a package for Greece amounting to 159 billion euro ($229 billion) in aid,
     including official loans and contributions from the private sector

     Under the plan, Greece would receive assistance in several ways. Holders of short-term obligations would
     be able to swap their notes for debt with longer maturities and backed by high-rated bonds. Meanwhile,
     the terms of the aid package from Europe to Greece would be eased, with maturities lengthened to 15
     years from 7.5 years, at an interest rate of a quite low 3.5 percent. Lower interest rates and longer
     payback terms will be extended to Ireland and Portugal as well.

     Meanwhile, French President Nicolas Sarkozy said the EFSF (European Financial Stability Facility) will be
     able to buy sovereign debt in the secondary market.

     EU members lacked consensus for a second bailout package for Greece and this rattled global markets.
     However yesterday’s agreement to rescue Greece and measures to ease pressure on other debt ridden
     nations is a step forward and eased come concerns.

     However long term problems for the Euro-zone are far from over. Greece lacks capacity to repay its loans
     as debt remains high. Meanwhile, rating agencies have said in recent months that a distressed Greek debt
     restructuring could be considered a default. Also debt ridden nations are finding it difficult to implement
     the austerity measures. In addition to speculation remains high that debt problems may engulf as well.
     Meanwhile expectation is high that euro zone's bailout fund, the, will be expanded.

     Gold gained over last few days as US policymakers failed to agree on a debt deal. However recent reports
     indicate that debt talks are progressing.

     The U.S. will reach its maximum legal borrowing limit in early August unless Congress and the White House
     can agree to raise it. There is debate about how to attach a long-term deficit-reduction plan to any
     increase in the debt ceiling.

     Expectations that deal will be reached rose after reports noted that President Barack Obama and House of
     Representatives Speaker John Boehner (R., Ohio) were close to agreeing to a $3 trillion budget deal.
     However enthusiasm sapped after Speaker John Boehner denied reports a U.S. budget bargain was near.

     While optimism has increased that US policymakers will come to a consensus uncertainty is likely to prevail
     until the deal is passed. Meanwhile policy markers are taking measures in event of a default which
     indicates uncertainty. As per Reuters report, Philadelphia Federal Reserve Bank President Charles Plosser
     said that the Fed is actively preparing for the possibility that the United States could default.

     Apart from debt concerns, gold is also gaining support from renewed expectations that Fed could consider
     additional support for the US economy in case economy worsens. Fed Chairman last week clarified that
     that a new stimulus plan is not imminent and that the time had not come yet for additional support and
     noted inflation had picked up since late 2010. However weakening outlook for US economy will keep

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    22 July, 2011                                    Bullion Daily
     speculation high that additional support is possible.

     US economic data released this week has been mixed indicating weakness in the economy. As per the data
     released yesterday, US Philadelphia Fed manufacturing index rose more than expectations. On the other
     hand weekly jobless claims were higher than expected. Leading indicators data was in line with
     expectations.

     Meanwhile a Fed official yesterday said yesterday that it U.S. economy does not show signs of sustainable
     improvement this quarter, the Federal Reserve should dig into its toolbox to find new ways to help it along.

     Overall, gold has eased a bit as progress in debt talks in US and agreement on second bailout for Greece
     reduced demand for safe haven asset. However, uncertainty persists until US deal is passed and this will
     limit major downside in gold prices. Focus will continue to be on situation in the US and Euro-zone.

     Silver- COMEX Silver trades marginally higher Friday after a three day decline. Silver has fallen sharply
     over last few days as gold retreated from record high levels and amid choppiness in industrial metals.

     Gold has eased as debt talks in US and Euro-zone reduced safe haven demand. Industrial metals remain
     choppy as progress over debt deals failed to ease concerns about health of major global economies.

     Meanwhile investment interest also remains mixed. Silver holdings with Ishares ETF rose by 45.46 tonnes
     yesterday to 9849.17 tonnes. Holdings fell 60.62 tonnes a day earlier.

     Outlook

     Gold- MCX Gold may note some gains tracking cues from international exchange. COMEX gold has eased a
     bit from recent highs as debt talks progressed in Euro-zone and US limiting demand for safe haven asset.
     Meanwhile drop in ETF holdings also indicates some profit taking in the market. However a sharp drop in
     gold is unlikely as uncertainty prevails about health of US and Euro-zone economies. US policymakers are
     yet to agree on raising debt limit and although it is most unlikely that US will not come to an agreement,
     uncertainty will persist until the decision is reached. With no major US economic data, focus today will
     largely be on trend in currency and equity markets. Continuing optimism that EU and US deal will be
     reached could limit upside for gold. Support for MCX Gold Aug. contract is seen at Rs.22775 while
     Resistance is seen at Rs.23100.

     Silver- MCX Silver may note some gains tracking cues from international exchange however upside may be
     limited. COMEX Silver trades higher after sharp fall over last two days. Supporting prices is rangebound
     movement in gold after recent fall. However weighing on prices is choppiness in industrial metals. Also
     optimism in the market is limiting safe haven demand for gold. Support for MCX Silver Sept contract is
     seen at Rs.56800 while Resistance is seen at Rs.59400.

     Data and Events due today
        • German IFO - Business Climate (JUL)
        • Euro-Zone Industrial New Orders (MAY)




Bullion Daily                       Please See Disclaimer on the Last Page                                     3
    22 July, 2011                                                                     Bullion Daily



                    Faiyaz Hudani                                                                           Dharmesh Bhatia
                    Sr. Research Analyst- Spices, Edible Oil                                                Associate Vice-President- Technical Research
                    faiyaz.hudani@kotakcommodities.com                                                      dharmesh.bhatia@kotakcommodities.com
                    +91-22-66528837                                                                         +91-22-66528846




                    Sudha R. Acharya                                                                        Amit Sajeja
                    Research analyst- Edible Oil, Pulses                                                    Sr. Research Analyst- Technical Analyst
                    sudha.acharya@kotakcommodities.com                                                      amit.sajeja@kotakcommodities.com
                    +91-22-66528809                                                                         +91-22-66528847




                    Madhavi Mehta                                                                           Ajay Baheti
                    Research analyst- Energy, Bullion                                                       Associate Research- Technical Analyst
                    madhavi.mehta@kotakcommodities.com                                                      ajay.baheti@kotakcommodities.com
                    +91-22-66528857                                                                         +91-22-66528845




                    Priyanka Jhaveri
                    Research analyst- Base Metals
                    priyanka.jhaveri@kotakcommodities.com
                    +91-22-66528848




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