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					    07 Sept, 2011                                                        Bullion Daily
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         FOR PRIVATE CIRCULATION ONLY                                                                                                             07 Sept 2011

                                      Gold                                                                                  Silver
                     COMEX (Most Active) As on 06-Sep                                                       COMEX (Most Active) As on 06-Sep
   Contract         Open           High            Low        Close     Change          Contract           Open          High              Low         Close      Change
     Oct-11        1879.2       1920.8         1842.0        1870.6       -3.8          Sep-11            4299.0      4344.5           4160.0         4186.8       -120.1
     Dec-11        1879.9       1923.7         1861.8        1873.3       -3.6          Dec-11            4324.5      4339.5           4171.0         4189.1       -120.1
     Feb-12        1884.7       1925.1         1864.0        1875.1       -3.5          Mar-12            4311.0      4311.0           4189.0         4189.0       -119.9
     Apr-12        1893.6       1925.0         1876.1        1876.9       -3.4          May-12            4181.0      4187.8           4181.0         4187.8       -119.9
     Jun-12        1896.0       1928.3         1872.3        1878.8       -3.3          Jul-12            4323.5      4323.5           4185.1         4185.1       -119.8


                             MCX India as on Sept 6                                                                MCX India as on Sept 6
   Contract         Open           High            Low        Close     Change          Contract           Open          High              Low         Close      Change
     Oct-11        28545         28744         27726         27969        -516            Dec-11          66476        66893              64400       64605        -1789
     Dec-11        28825         29002         27976         28236        -519            Mar-12          67898        68170              65673       65957        -1747
     Feb-12        29001         29277         28417         28550        -395            May-12          69000        69076              66800       67378         -973
     Apr-12        29478         29565         28875         29095         -57             Jul-12         70087        70087              68620       69354            3

                         MCX Gold Spread Matrix                                                              MCX Silver Spread Matrix
                      Oct             Dec           Feb         Apr                                         Sept            Dec            Mar           May
          Oct            0            -267         -581        -1126                          Sep            0           -1352             -2773        -4749
          Dec                          0           -314         -859                          Dec                            0             -1421        -3397
          Feb                                        0          -545                             Mar                                        0           -1976
          Apr                                                    0                            May                                                         0

                                                                                     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    1891    1172.9     1330.8        41.85   26.0099    29.5447   0.42167 0.435    0.448    0.472   0.508      0.42         0.436     0.386     0.244     0.07
    PM    1895    1182.8     1346.4                                                                                                                 source:lbma.co.uk


     Highlights                                                                                                                    Major Currencies
          •      COMEX gold trades falls sharply to hit a low of $1818.2/oz        Currency   Type  Quote    % Chg
                 but shed some of the losses                                    USD Index      Spot   75.902    0.88%
          •      Gains in equity markets continues to weigh on gold prices
                                                                                EUR USD        Spot    1.400   -0.67%
          •      The US dollar index trades lower today after 0.9% rise
                 yesterday                                                      USD INR        Spot   46.110    0.27%
          •      Asian equity markets trade higher today after recovery in US   USD JPY        Spot    77.59    0.87%
                 markets
          •      Australian GDP rose 1.2% in Q2 as against expectations of 1% increase
          •      US ISM non-manufacturing PMI rose to 53.3 in August, from 52.7 in July
          •      Euro-zone GDP rose 0.2% in Q2 in line with expectations; GDP rose 1.6% from same quarter last
                 year.
          •      German factory orders fell 2.8% in Aug as against expectations of 1.5% decline
          •      Swiss National Bank Tuesday set a minimum exchange rate of 1.20 francs to the euro
          •      Gold holdings with SPDR ETF were unchanged at 1232.314 tonnes on Tuesday
          •      Silver holdings with Ishares ETF were unchanged at 9782.15 tonnes on Tuesday
          •      Focus today on UK, German industrial production and US Beige book

     Market Analysis

     COMEX gold was holding in a narrow range around $1880/oz level but fell sharply with fraction of seconds
     to hit a low of $1818.2/oz level. Gold however is holding near $1845/oz level currently.

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    07 Sept, 2011                                   Bullion Daily
     Gold fell today after sharp price movement yesterday. Gold hit a record high level of $1923.7/oz in
     intraday trade yesterday but shed all the gains and hit a low of $1861.8/oz before ending with a minor
     0.2% drop at $1873.3/oz. Gold trades under pressure amid strength in equity markets.

     Gold has rallied sharply in past few months supported by safe haven demand amid increasing uncertainty
     about major global economies especially the US and Euro-zone. However near term in gold has largely
     been determined by trend in equity markets. Meanwhile the sharp price movement in gold has also raised
     concerns about gold’s ability as a safe haven asset.

     Gold hit record high level yesterday as Asian equity markets noted some decline. However firmer opening
     in European markets led to a sell-off in gold prices. Meanwhile Swiss National Bank’s move set a minimum
     exchange rate for the Swiss franc against the euro also led to sharp price movement in currency and equity
     markets. While European equity markets ended on a mixed note, gold remained under pressure as US
     equity markets showed some recovery from intraday low amid upbeat US ISM non-manufacturing data.

     US DJIA index ended lower by 0.9% at 11139.3 points but was off intraday low of 10952.53 points.
     Tracking the recovery in US markets yesterday and upbeat Australian GDP data, Asian equity markets are
     trading higher today.

     While trend in equity and currency markets are determining direction for gold in the near term, supportive
     factor persists for gold. Outlook for major global economies has weakened further over past few months.
     Meanwhile bleak economic outlook has cemented views that central banks may take more steps to support
     the economy. This has further boosted gold prices. In addition to it, the sharp movement in currency
     markets will also increase gold’s demand as an alternate asset.

     The recent sell-off in equity markets amid increasing concerns about US and Euro-zone economies led to a
     rally in safe haven assets like gold, Swiss Franc, Japanese yen and US treasury bonds. However concerns
     of intervention by central bank have kept a check on Swiss Franc and Yen. This has also increased safe
     haven buying demand for gold and US treasury bonds.

     The Swiss National Bank on Tuesday set a minimum exchange rate for the Swiss franc against the euro at
     1.2 francs, in a bid to contain a rise in the franc that it says poses a threat to Switzerland's economy.
     Limiting upside in Swiss Franc will further shift safe haven buying to gold and US bonds.

     Mixed US economic data raised concerns about slowdown in the economy. Data released yesterday noted
     that US ISM non-manufacturing index rose to 53.3 as against expectations of a dip to 51. This however
     contrasts with weaker non-farm payrolls data released last Friday which noted that US economy did not
     add jobs in the month of Aug. while unemployment rate remained unchanged at 9.1%.

     Weaker US economic data has further raised expectations that the central bank may take more steps to
     support the economy. At a meet last month, Fed Chairman said that the Fed would extend its mid-
     September meeting to two days to discuss options possible policy options. Fed’s next meet is on Sept 20.

     The US will continue with lower interest rates as unemployment rates are high and housing market
     remains under pressure. With increasing pessimism about US economy, expectations are high that the
     central bank may announce additional stimulus for the economy but we may not see a major bond
     purchase program like the one announced last November at least in the near term. Also central bank
     officials do not seen unanimous over additional stimulus. As per Reuters report, Minneapolis Federal
     Reserve Bank President Narayana Kocherlakota said yesterday that the US economy was not in need of
     more stimulus last month and would likely not be in September either. Meanwhile, Richmond Fed President
     Jeffrey Lacker, said further stimulus would likely show up almost entirely in higher inflation without doing
     much to boost growth.

     Apart from US economy, concerns are high about Euro-zone economies amid uncertainty about additional
     financing for Greece and increasing pressure on Italy. Euro-zone debt concerns have already engulfed
     Greece, Ireland and Portugal and concerns are high that major economies may also come under pressure.
     Also austerity measures will affect growth.

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    07 Sept, 2011                                   Bullion Daily
     Concerns about additional financing for Greece are high after a number of national including Finland asked
     for collateral for their share of loan. Meanwhile talks of another tranche for EU loan halted last week over
     uncertainty that the nation will be able to meet fiscal targets. While Greece has maintained that it will
     accelerate austerity measures in return for international financing, German has clarified that Greece will
     not be able to receive another tranche of international aid if the delayed report from the IMF, ECB and
     European Commission is not positive.

     Concerns about Italy have pushed bond yields higher increasing cost of borrowing. The largest union in
     Italy called for a strike as austerity measures were debated in the Parliament. Italy's senate will hold a
     confidence vote on the government's amended austerity package today. ECB interest rate decision is due
     later this week and we shall wait and see whether there has been any shift in stance due to increasing
     pressure on regional economies.

     Overall, gold has retreated sharply from recent highs as stability in equity markets has triggered profit
     booking. However supporting prices is uncertainty about major global economies. Focus will continue to be
     on US and Euro-zone economy. For US economy, focus will be on economic data, trend in equity markets
     and political situation. For Euro-zone economies, focus will be on bond yields, talks about changes in
     emergency aid fund and additional financing for Greece. Some of the key events due this week include BOE
     and ECB interest rate decision and Obama’s speech on Sept 8. President Barack Obama plans to address a
     joint session of Congress on Thursday to propose economic measures, including tax breaks to spur hiring
     and more spending on infrastructure.

     Silver- COMEX silver shed all the gains noted earlier in the session and is trading slightly weaker now.
     Silver slipped into the red zone as gold saw a sudden sell-off.

     Mixed trend in gold and industrial metals has increased volatility in silver prices. Meanwhile ETF interest
     remains slack as is evident from unchanged holdings with Ishares ETF.

     Outlook

     Gold- MCX Gold has opened sharply lower after the sharp drop in COMEX gold prices in Asian trading
     session. Weighing on gold prices is profit taking amid stability in equity markets and sharp movement in
     currency markets following SNB’s move to curb Swiss franc’s gains. However we expect gold prices to
     recover later in the day as gold may gain support from uncertainty about US and Euro-zone economies.
     Near term direction for gold will be determined by trend in equity markets which is an indicator of general
     market sentiments. Focus today will be on UK and German industrial production and US Beige book report.
     Apart from it, focus will also be on Italian vote on austerity measures. Support for MCX Gold Oct. contract
     is seen at Rs.27125 while Resistance is seen at Rs.28200.

     Silver- MCX Silver opened sharply lower as gold prices slumped. We expect silver prices to remain choppy
     and on a weaker side amid mixed trend in gold and industrial metals and slack ETF buying. Support for
     MCX Silver Dec. contract is seen at Rs.62800 while Resistance is seen at Rs.66200.

     Data and Events due today
        • UK Industrial Production (JUL)
        • UK Manufacturing Production (JUL)
        • German Industrial Production (JUL)
        • US Fed Releases Beige Book Economic Survey




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    07 Sept, 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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