April Gold future rose to a high of $558.30 while silver may future rose to a high of $1039.50 in the first hour after comex open and there after fell to settle lower at $554.40 and $1035.00.Silver is being once again buoyed by news on Barclays proposed silver Exchange Traded Fund (ETF). Investors are waiting for the Securities and Exchange Commission to rule on the proposed silver-backed exchange-traded fund that Barclays Global Investors has filed with the regulator.
I do not understand the hype that is being is created by ETF news. ETF’’s of gold and silver will be opened by every major commodity exchange including India. They are here to stay for a long time. ETF’s are just another financial instrument of investment. If there is any reduction by way of ETF related demand for silver, then it will fall. Silver is a very wild commodity.
The Iran issue is moving from a bad to worse case scenario as Japan, Iran’s biggest oil customer, became the first country to reduce its imports of Iranian oil because of Tehran’s nuclear dispute with the west. Nippon Oil, Japan’s largest refiner, will cut its purchases of Iranian crude oil by 15 per cent this year, Fumiaki Watari, Nippon’s chairman, said yesterday. The move was announced as the permanent five members of the UN Security Council failed to agree a statement expressing “serious concern” about Iran’s nuclear programme. These developments are all bullish for gold, silver and other safe havens.
As far as the Indian gold and silver demand scenario is concerned, Indian jeweler as well as retail buyer is now accustomed to gold prices near Rs.8,000 per ten gram and they are buying gold and silver on every major dip. This can reflected from the Multi Commodity Exchange (MCX) prices of gold where it is trading nearly Rs.60 – Rs.70 over the cost price where in January, 2006 gold was trading Rs.20- Rs.30 below cost.If and when there is a sharp fall in gold prices, demand from India will be huge. Infact large importers are waiting for a sharp dip so that they can stash gold for the peak season demand from September 2006 onwards.
Sharp pullbacks (if any) like last Thursday and Fridays should be used as an opportunity to go long.
GOLD
Gold needs to break and close over $558.00 - $563 zone for $575.00 - $580 zone. On the lower side $550.00 is the initial support with $542.80 and $534.00 as the key short term supports.
SILVER
Silver targets $1040 and $1076. As long as $1010 holds on closing basis there is every possibility of $1100 over the coming weeks. A consolidated fall below $1010 will result in $994.00 and $968.00.
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