It’s Iran time! Different statements are coming from the ruling Iran government itself. Iran’s Foreign Minister Manouchehr Mottaki, said Iran had no intention to use oil as a weapon in its confrontation with the West over its nuclear programme, contradicting Interior Minister Mostafa Pourmohammadi who said a day earlier that Tehran could use oil as a weapon if the UN Security Council imposed sanctions against it. It seems that the Iranian government is not united on how to deal with US and its allies over its nuclear issue. The latest news is that Iran will no longer consider a proposal to move its uranium enrichment programme to Russian territory, the Foreign Ministry spokesman said. Instead, it is considering large-scale uranium enrichment at home. Iran also made a vague threat that it might drop out of the Nuclear Nonproliferation Treaty over the decision by the United Nations' nuclear monitoring body to forward its case to the Security Council.
From the past moves, it seems that Iran was just trying to buy the time and hoping that the West will accept the proposals of Iran. This policy has back fired on them. Ultimately US President Bush will run out of patience and there could be sanctions or armed assault on Iran. The next fifteen trading sessions will be very crucial for gold, silver as they will sing the Iran tune. We all know the earth, while the sky is open for gold and silver.
Gold April future fell to a low of $534.50 while silver May future fell to a low of $968.00 in the previous week. In gold there seems to be tussle between physical traders and speculators. There is a huge physical demand at lower levels specially London while speculators in US are desperately trying to push gold lower. This can be seen from the fact that last Thursday, there was strong physical demand from Middle East as well London while resulted in spot gold rising all the way to $550.75 before falling in US session. While on Friday, there was comparatively less demand for gold which resulted in gold falling in London as well as US session. The fight has just started between short term bulls and bears and Iran issue is supporting short term gold bulls.
There has been extensive crop damage due to rain and hail storms in most parts of India. The expected gold demand from farmers will reduce from India. However jewellery demand will remain robust with the advent of marriage season.
Crude oil price are trading between $59.00 and $63.00 a barrel. If crude oil prices spike up due to the geopolitical tensions and supply disruptions, then gold and silver will flare. The de linking between gold prices and the US dollar should continue. However reduction in global liquidity will result in higher volatility.
GOLD
As long as gold holds $534.00 on closing basis, the downside is limited. A consolidated fall below $534.00 will result in $525.00 and $510.00. There are large buy orders at lower levels. The upside is open with $554.00 and $568.00 as the resistance zone.
SILVER
A break of $1010.00 will result in $1030 - $1040.00 very quickly. On the lower side $994.0 is the initial support with $968.00 as the key short term support.
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