Gold Descends as Japan’s Nuclear Crisis intensifies

Gold stopped its two day advance and depreciated Tuesday on concerns that global recovery may be damaged due to Japan's strongest earthquake on record, along with the nuclear crisis which spurred a selloff in commodities Tuesday.

Bullion for immediate delivery dropped severely in trading to $1,416.84 an ounce compared with the opening levels of $1,428.30 an ounce, while setting a high of $1,428.35 an ounce and a low of $1,407.74 an ounce. Futures fell 0.59% to trade at $1,416.500 an ounce.

A third blast in Fukushima Dai-Ichi nuclear power plant occurred today, while Japan's Prime Minister Naoto Kan said that the risk of radiation leaks continues on rising. Asian shares dropped, led by Japan's equity index, on concern that the country's recovery will be crippled.

The US dollar index, which tracks the performance of the currency against six-majors, traded near the opening levels of 76.682, while setting a high of 76.827 and a low of 76.594. Gold usually moves inversely with the dollar as commodities are a dollar weighted index.

Inflation in India unexpectedly increased last month, where Wholesales prices rose by 8.3 percent from a year earlier. The Reserve Bank of India will probably increase rates this week in order to control inflation.

India is the world's biggest consumer of gold, while hedging against inflation could spur the government into purchasing more gold to tackle rising prices in the country. Brazil, China, Indonesia and other countries started to hint for the possibility of increasing rates to tackle inflation levels.

RBI increased rates seven times during the past year, compared with five times in Brazil and three times in China, while Russia unexpectedly increased the refinancing rate from a record low last month, the first in more than two-years.

Today's FOMC rate decision will probably show the bank's monetary stance to remain unchanged during March, where analysts highly expect the bank will preserve the rate near record low of 0.0% and 0.25 percent.

The decision will help depreciate the value of the dollar, supporting further bullish trend for the precious metal to probably return and trade near record at 1,444.0.

The S&P GSCI index closed trading at 699.92; lower by 1.14 percent, while the RJ/CRB commodity index closed at 350.61, after dropping 1.27 percent.

Technically speaking, the metal's trend remains to the upside as far as the support at $1,390.00 an ounce remains intact, while the 100-day MA support level is set at 1,374.00 an ounce.

Gold's trading remains above the support at 1,400.00 an ounce, where if breached it will pave the way for the pair to test the support at %1,390.00 an ounce, but the general trend remain to the upside with initial targets set at 1,425.00 an ounce and probably return to trade near the achieved record around $1,445.00 an ounce.

Major Metal Fixing

As for metal Fixes (Mar 14); Gold fixed at AM Fix was set at $1,424.50 an ounce while the PM fixing (MAR 14) was set at $1,422.25 an ounce; meanwhile silver fixing was set at $36.18000 an ounce and Platinum AM Fixing (Mar 14) was set at $1,759.00 an ounce, and at 1,762.00 an ounce during the PM fixing (Mar 14); finally ending with Palladium AM fixing set at $756.00 at (Mar 14) AM fixing, while the PM fixing (Mar 14) was set at $752.00 an ounce.

Other Metals

Silver for immediate delivery traded at $35.27 an ounce compared with the opening levels of $35.92 an ounce, while setting a high of $35.92 an ounce and a low of $34.63 an ounce. Silver future contracts traded lower by 1.67% or 0.600 to trade at 35.240 an ounce

Platinum for immediate delivery traded lower by $22.0, at $1,726.50 an ounce, while Palladium dropped by $12.0 to trade at $726.50 an ounce.