There is hardly anything new to comment on gold and silver as they continue to find buyers at lower levels. Gold June future reached a new high of $608.40 yesterday before settling lower at $599.40. Silver May future continued to record highs as it rose to a high of $1301.00 before settling at $1260.00. Crude oil future are on the journey to break $70.00. The US dollar is weaker ahead of the way trade balance numbers.
Spot silver is trading $6.00 above the future prices. Silver spot and silver future were equal when silver May future reached a high of $1301.00. Spot silver has to trade below silver future consistently, if there has to be a sustained correction. As long as spot silver trades higher over the future silver, silver will continue to find buyers at higher levels. However the spot and futures equation can change anytime.
Gold has more room to rise than silver. Lingering worries over the US dollar depreciation is resulting in central bank diversification of their US dollar foreign exchange reserves into gold. Rising tensions in Middle East is also resulting in these oil rich nations to diversify a part of their investments (other than foreign exchange reserves) into gold. The retail investor in Middle East has also increased their investment in physical gold in light of war risk. There is all round physical demand.Once crude oil risk subside even for the short term, gold will fall.
Gold and silver should close higher tomorrow ahead of a long weekend. Nobody will like to take a chance and go short over the weekend, despite the technical calls for a correction. Volumes will reduce from today as retails investors take a break.
GOLD
Gold targets $613.40 and $624.20. On the lower side $595.10 and $586.40 are the support zones. A consolidated fall below $586.80 will result in $578.80 as the next support level.
SILVER
Silver needs to break $1294 - $1300 zone for $1400. On the lower side $1258 and $1208 are the initial supports with $1194.00 as the key short term support.
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