MTECHTIPS COMMODITY MARKET NEWS 1

MTECHTIPS:-Gold plunges in Asian trading following Fed meeting

After strengthening in Wednesdays U.S. session following supportive comments from the Federal Reserve, gold futures plunged in Thursdays Asian session.On the Comex division of the New York Mercantile Exchange, gold futures for February delivery slid 1.09% to USD1,699.25 per troy ounce in Asian trading Thursday. Gold traded as high as USD1,713.55 and as low as USD1,695.75 per ounce, falling below the critical USD1,700 level.During the U.S. session, were up 0.54% at USD1,718.75 a troy ounce in U.S. trading, up from a session low of USD1,708.65 and down from a high of USD1,724.75 a troy ounce.The yellow metal is likely to test support at USD1,708.65 a troy ounce, the earlier low, and resistance at USD1,733.65, the high from Nov. 30. Golds action in Thursdays Asian session is arguably a stunning reversal of fortune from the U.S. session after the Federal Reserve said it will purchase USD45 billion per month in short-term Treasuries for long-term U.S. government debt when Operation Twist expires at the end of this month. Not surprisingly, the Fed did not alter U.S. interest rates, which hover near historic lows. Rather, the central bank said it will not evaluate interest rate increases until after the U.S. employment rate falls below 6.5%. Per the November jobs report released last week, the U.S. jobless rate currently stands at 6.5%.

MTECHTIPS:-Oil falls modestly in Asia despite bullish demand forecast

Oil futures slipped modestly in Asian trading Thursday despite news of more monetary easing from the Federal Reserve and an increased demand outlook from the International Energy Agency.On the New York Mercantile Exchange in Asian trading Thursday light, sweet crude futures for January delivery fell 0.24% to USD86.56 per barrel. The contract traded as high as USD86.74 and as low as USD86.54 per barrel.On Wednesday, the International Energy Agency boosted estimates for oil consumption in the fourth quarter and 2013 due to improved economic activity in China, the worlds second-largest oil consumer. IEA said international oil consumption will average 90.5 million barrels a day in the current quarter. That is about 0.5% higher than the agencys previous forecast. For 2013, IEA expects global consumption of 90.5 million barrels per day. That forecast is up by 110,000 barrels per day from the prior estimate. IEA expects China to consume an average of 9.9 million barrels per day this quarter and an average of 9.8 million barrels per day next year. Regarding oil production, the Organization of Petroleum Exporting Countries met in Vienna Wednesday. As many traders expected, the cartel did not alter its current production quota of 30 million barrels per day. OPEC member states account for 40 percent of global oil output.The U.S. Energy Information Administration said oil inventories in the worlds largest oil-consuming nation jumped by 800,000 barrels last week to 373 million barrels. Analysts were expecting a decline in the weekly inventory data.

MTECHTIPS:-Fiscal cliff issue steals the QE4 show in Gold and Silver
Investors sold heavily on the Comex as markets drew to a close taking gold and silver prices down by a significant margin as the community fretted and fumed about the possibility of US going off the fiscal cliff.Dollar, the ultimate safe-haven bounced back from a three-day decline against a basket of six major currencies. Gold and silver prices, as a result, tumbled.Gold for February delivery on the Comex was seen trading at 1702.55 an ounce, a drop of 0.89% as of 10.08 AM IST, Thursday. Silver on the Comex was at $33.11 registering a loss of 0.664 dollars, a drop of 1.97%. On India's MCX, gold for February delivery was seen trading at Rs.31163 per 10 grams, a loss of 0.75% as of 10.15 AM IST. Silver for March delivery was spotted trading at Rs.62311 a kilogram, a loss of

1.45%. Investors are now focused on the fiscal cliff negotiations, which are looking protracted and threatening to weigh on all markets, said Xiang Nan, an analyst at CITICS Futures Co., a unit of Chinas biggest listed brokerage to Bloomberg News. We view a drop below $1,700 as a good buying opportunity. The Fed sent a strong signal about supporting the economy and keeping the easy monetary policy stance unchanged, which should support higher gold prices in the longer term. Nan added.On the Comex, silver prices climbed the most after the QE boost by US Federal Open Market Committee. As of 11.30 PM IST Wednesday, silver climbed by 2.33% to reach $33.787 an ounce even as gold jumped 0.79% to touch $1723.05 an ounce. WTI crude oil for January delivery was seen climbing by 1.82% to reach $87.35 a barrel at 11.33 PM IST.Subsequent to QE4 announcement yesterday night, on India's MCX, silver for March delivery climbed by 1.34% and was seen trading at Rs.63162 as of 11.37 PM IST, Gold for February delivery was seen trading at Rs.31408/10 grams, a gain of 0.1%. Crude oil for December delivery was seen trading at Rs.4727 a barrel, a gain of 1.18%.

MTECHTIPS:-Why Gold is falling and why it will bounce back

Gold has tumbled for two reasons post the alphanumeric extravaganza, QE4. The primary reason is profit booking and the secondary reason is pessimism; pessimism pertaining to US Fiscal Cliff.Investors are now focused on the fiscal cliff negotiations, which are looking protracted and threatening to weigh on all markets, said Xiang Nan, an analyst at CITICS Futures Co., a unit of Chinas biggest listed brokerage to Bloomberg. We view a drop below $1,700 as a good buying opportunity. The Fed sent a strong signal about supporting the economy and keeping the easy monetary policy stance unchanged, which should support higher gold prices in the longer term. Nan added.If the current budget talks between Republicans and Democrats fail, US is sure to go off the cliff and none other than the Congressional Budget Office has predicted contraction in the economy (read recession) even as $600 billion in spending cuts and tax spikes would come into force on its own. The fragile economy that is the United States of America would come to a grinding halt overnight.And with the worsening Eurozone crisis, things would go out of hand, analysts say. This scenario is deemed best for gold prices, one would think. But it may not be the case.