It’s the same old story for gold, silver and copper.Japan and China push gold, silver and copper higher to record levels in Asian trade. European session results in some profit taking and marginal fall, then in US session there is a fall to eat into the stop losses of the intra day traders/jobbers and some profit taking and towards the close gold, silver and copper close very high above the previous days close. The next morning again gold, silver, copper are higher in Japanese session. This continues everyday.Call it a parabolic bull run, second phase of a secular bull run or by any other name, then end result in that gold, silver and copper are rising every day and previous days high becomes the successive days lows. The reason is Japanese hedge funds are getting money at near zero rate of interest, a la free money from the bank of Japan which results in prices shooting higher in Asia. In the middle east even an average retail investor is diversifying into physical gold (not paper gold like futures) due to war like situations. US is the biggest paper market and one can create endless types of paper instruments for trading like, futures, options, ETF’s , the list goes on. When will this end, it seems like a mirage in a desert.
Gold June futures rose to a high of $628.10 while silver may future rose to a high of $1409.50 in Asian trade. Crude oil and copper futures show no signs of respite while the US dollar gets ripped apart after last month’s Federal Open Market Committee meeting signaled that only one more rise in short-term interest rates was likely. Most FOMC members felt the end of the cycle of rate rises was “near”, according to the minutes of the first meeting chaired by Ben Bernanke. It’s just the interest rate factor that is supporting the US dollar at the moment. Record crude oil prices even before the advent of the peak US summer driving season will affect the US economy and Mr.Bernake will have to make a difficult choice to raise interest rates of control inflation and at the same time not retard growth.
Overall bullish trend remains in intact. Better to play with the momentum and buy on dips with a stop loss and be flexible to take a reverse call if the momentum shows signs of drying out.
GOLD
Gold targets $655 and $735. It needs to break 630.95. On the lower side $614.30 is the initial support with $594.00 as the key short term support.
SILVER
Silver targets $1650 - $1750 and further at $2100 if it is able to sustain the momentum. At the moment silver continues to defy the technical picture. We maintain $1076 as the price target whenever there is a sustained fall. For the day there is an initial support at $1331 and $1286 with $1247.50 as the key short term support.
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