Silver neared $1100.00 an ounce as May future rose to a high of $1070 before settling at $1069.00. The rise in silver also helped gold as April future rose from a low of $545.10 to a high of $551.90 and settled at $550.80. Copper also showed no signs of respite as May futures reached a high of $239.90 and it continues to scale higher on higher Chinese demand. Crude oil futures rose almost $2 amid concerns about supplies from Nigeria after ENI, the Italian energy group, declared it could not honour some of its oil contracts from the West African nation following militant attacks on its facilities.
Silver will edge higher and higher till the new ETF does not start trading. As silver nears/crosses $11.00 an ounce, short term traders as well as intra day need to be cautious while going long. Long term traders need no worry as silver should near $15.50 - $16.50 an ounce this year. In the short term silver may rise over $11.00 to $12.00 an ounce but I still expect a correction to $9.50 an ounce in the next four to six weeks. Stop losses are useless whenever there is a correction in silver. Traders need to have a higher margin money in orders to prevent open positions being squared up due to lower margin.
In MCX silver may future rose to a high of INR 15075 for the first time yesterday and will try too near INR 15250-15750 over the coming weeks. However I still expect silver MCX silver may future to rise fall to INR 14140 – 14200 and below next month. Gold April future are trading in INR 7940 – INR 8070 wider range and needs to break INR 8120 for further gains. Yesterday there was sellers of 500 kgs between INR 7970 – INR 7980 which resulted in the fall to INR 7957. I have started a new paragraph on MCX and this will continue.
The Japan-China and China – US trade disputes have started rising. Japan has suspended decisions on new yen loans to China, blaming its increasingly strained political ties with its biggest trading partner and former wartime adversary. The China US dispute took a further turn after comments from US Senator Schumer who expects the US government to label China a currency manipulator in their next report if China does not make any changes soon. There are rumors of the US government hiring analysts to run case studies on how the markets would react if China was truly labeled a currency manipulator.This goes to show that they may already be contemplating this possibility. The Bush administration wants to pass of the buck to China for the manufacturing job losses. It seems that US is unwilling to accept China as a new super power and so all these fuss. It is also an early warning signal of protectionism by the Bush administration which should further help gold, silver and other precious metals.
Considering the event risk next week, traders will prefer to long than short over the weekend. Gold and silver are expected to trade higher. Sharp pullbacks (if any) 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 $547.80 is the initial support with $542.80 and $534.00 as the key short term supports.
SILVER
Silver targets $1080 and $1110. However silver needs to hold $1050.00 on closing basis to prevent a fall to $1032.00. The key short term support stand at $1008 and as long as $1008.00 holds on closing basis the downside is limited.A consolidated fall below $1008.00 will result in $994 and $968 respectively.
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