-- Posted Monday, 10 April 2006 | Digg This Article

GOLD	SILVER
COMEX GOLD JUNE FUTURE -- $597.40	COMEX SILVER MAY FUTURE -- $1229.50
EXPECTED TRADING RANGE
GOLD -- $586.30 -- $620.60	SILVER -- $1194.00 - $1270.00
COPPER AND CRUDE OIL -- EXPECTED TRADING RANGE
COPPER MAY -- $260.30 - $270.35	NYMEX CRUDE OIL APRIL  - $65.80 - $71.00
MULTI COMMODITY EXCHANGE OF INDIA (MCX)
GOLD JUNE FUTURE/10 GRAMS	SILVER MAY FUTURE/KG
Rs.8530- Rs.8875	Rs.17650- Rs.18600
COPPER MAY FUTURE	CRUDE OIL APRIL FUTURE
Rs.250.75 - Rs.270.35	Rs.2940 - Rs.3070
GENERAL MARKET CONDITIONS
It’s all about global liquidity for commodities as well as global financial markets. I just can’t help it, I have to touch upon the global liquidity issue once again. The US 10 year yields neared the psychological 5.00% while the US 30 year yields are trading near the 5.00% mark. After the march payroll numbers markets now expect the Fed to raise interest rates in June. (We had mentioned right from 2005 that the Fed will raise interest rates till June 2006, thereafter take a pause and start cutting interest rates from November 2006). Investment in treasuries are considered untouchable by retail investors as well fund manager in the four major developed economic zones, US, UK, Eurozone and Japan as they fail to cover crude oil induced inflation. Rising treasuries yields may make investors as well fund manager rethink on their portfolio strategy. In developed nations if one gets a consistent return higher than the GDP growth, it is considered excellent. By consistent return, I mean a return over a 15 to 20 year period. This is unlike India where an investment in an average performing mutual fund gives you a return of 40% to 50% annualized. This is for the Indian reader. Higher interest rates will reduce global liquidity. Interest rates are expected to harden globally in 2006 as well as 2007 by most of the countries. Central banks will raise interest rates in way that ensures stable growth rates. Higher interest rates will reduce global liquidity. However surplus liquidity will not vanish overnight. It is going to a very slow and steady process. Do not expect bank of Japan to raise interest rates from the present zero percent to one percent in the next three months and jeopardize the Japanese economy. Shrinkage in global liquidity is the only risk to medium term as well as long term bullish direction in commodity prices. There are no other factors which can prevent commodity prices to see bearish direction in the coming years, other than a global economic break down. The Bull is still here and will continue to eat the bear.   In the short term we could see a technical correction as huge short term hot money has flown not just into gold and silver but into other commodities as well.  Further there will be the cyclical contraction in demand which could result in profit taking. But do not expect a sustained big slide. In India gold, silver as well as copper traders for a correction to restock themselves up for the peak demand season beginning August, 2006. Every rising equity markets and real estate prices will not deter Indians to buy gold jewelers or gold gift items. Even if gold prices cross INR 10,000 per ten grams in 2006, I do not foresee a contraction in demand from India. Wages and salaries of the great Indian class are on the rise at an unbelievable pace. There is severe shortage of quality manpower as far as commodities are concerned. This is the case for many other manufacturing as well service sectors. The end result is poaching of the quality manpower. This also boosts the income. Then the every rising equity markets give the Indians fast money, a certain percentage of which is invested in gold. Indians are also learning slowly that commodities are mode of investment which gives them a return better than equities. In fact I tell whomever I meet in India that “If have you have not invested in commodities, you are missing something.”  I am writing all this is because countries like India, China and other developing nations will not let gold, silver and other commodities fall in the medium to long term. Western hedge fund managers and manipulators will slowly and steady loose their current grip in gold and silver. Who knows DGCX could give Comex a run for the money over the coming years.   To sum it up, sharp pullbacks or corrections should be used as an opportunity for long term investors to enter. This is not right time for long term investors to enter gold and silver in our opinion. One should be in the markets but keep on booking the profits, irrespective of the trading strategy.   This is an Easter week. Volumes could come down as the week progresses. Crude oil exchange traded fund (ETF) is expected to be listed in the American stock Exchange today. Silver ETF may take another 4-6 weeks for listing. Crude oil could fall once the ETF is listed. Lower crude oil prices could further support the technically over sold conditions in gold and silver.  Overall there will be two way movements in gold and silver this week, but there will be buyers considering the fragile geopolitical situation in the Middle East. Silver May future reached a new high of $1235.00 in Asian trade, while gold continues to remain robust. Reports of US’s intention attacking Iran over the nuclear issue will support gold and silver prices.
GOLD
A break $604.50 - $605.10 could easily result in $620.00 in less than sixty minutes. On the lower side $587.10 and $578.80 are the support zones. There is an initial resistance at $602.80.
SILVER
Silver now targets $1258 and $1300. The earlier resistance of $1194 is now initial the support with $1158.00 as the key short term support. There have been times when momentum defies the technical picture and silver continues to go higher. The same is happening now.
For Multi Commodity Exchange of India (MCX) reports as well as NCDEX reports on
metals as well as agri commodities please register at www.insigniaindia.com/register.asp
Happy Profitable Trading
Disclaimer : Any opinions as to the commentary, market information, and future direction of
prices of specific currencies, precious metals, base metals, or equity indices reflect the views
of the individual analyst, In no event shall Insignia Consultants or its employees  have any liability
for any losses incurred in connection with any decision made, action or inaction taken by any
party  in reliance upon the information provided in this material; or in any delays, inaccuracies,
errors in, or omissions of Information.

-- Posted Monday, 10 April 2006 | Digg This Article

© 1995 - 2019

Live GoldSeek Visitor Map | Disclaimer