-- Posted Friday, 21 April 2006 | Digg This Article

GOLD	SILVER
COMEX GOLD JUNE FUTURE -- $615.50	COMEX SILVER MAY FUTURE -- $1194.00
EXPECTED TRADING RANGE
GOLD -- $592.30 -- $640.60	SILVER -- $1062.00 - $1420.50
COPPER AND CRUDE OIL -- EXPECTED TRADING RANGE
COPPER MAY -- $285.40 - $310.40	NYMEX CRUDE OIL JUNE  - $69.80 - $77.20
MULTI COMMODITY EXCHANGE OF INDIA (MCX)
GOLD JUNE FUTURE/10 GRAMS	SILVER MAY FUTURE/KG
Rs.8550- Rs.9550	Rs.15,500 - Rs.22,500
COPPER MAY FUTURE	CRUDE OIL MAY FUTURE
Rs.284.35 - Rs.312.20	Rs.3,050 - Rs.3,450
GENERAL MARKET CONDITIONS
I have never seen silver futures hit two lower circuits in a single comex trading session. The first trigger for silver May future was hit at $1320.00 and the next at $1220.00. Gold also fell in line with silver and the overall fall in commodities. Over the past one month silver has rallied nearly fifty percent and the slide was bound to happen. Copper in my view did not even fall at all, considering the precious metals fall. Silver May future fell to a low of $1182 and Gold June future fell to a low of $613.80.   Equity markets are rising, treasury yields are rising, precious metals as well as base metal prices are rising. Every financial market in the world is rising and the global economic growth is on the rise mainly due to India and China. This is an unusual phenomenon and one of the financial markets will take a severe correction over the next six to eight weeks, which in our opinion should be the equity markets. Gold and silver bulls need not worry. If better alternate investment avenues come up, some of the money from equity as well as commodity markets will be divested and invested in the new markets which could result in short term correction in these markets. I am a looking at Chinese equity markets as the next force to reckon with over the coming years and could threaten the Indian equity rally.   In India there has been severe short covering in MCX gold June future and silver may futures.  The short covering was so huge that with every 1 cent rise in silver MCX silver prices were rising more than INR 50. MCX Silver may futures rose to a record INR 23148 before settling lower at INR 18589. Gold June futures also rose to a high of INR 9771 before settling lower at INR 9073. This a record two way movement for commodity prices in India. It’s the retail investor, particularly from Southern India who were buying silver above INR 22,500 and were caught off guard the most. Most of these retail investors are new investors and have been trading in commodities for less than a year. It’s been a bull run for the past one year and yesterday’s slide was the first experience for these investors. This is the reason why stop losses are important as yesterdays slide can pare your previous profits. I am writing this for the benefit of every body as retail investors in India have been on a buying spree without a stop loss for the past four months and were keeping naked open positions for weeks. In a long term bull rally these corrections may come for a few hours or for a day or two, but because of margin calls, the longs sometimes get squared, which otherwise may not be necessary. Please have the patience on deciding on averaging. Yesterday one of my clients was long at MCX silver may at INR 22,700 and he averaged at INR 21,700 and INR 19700, and then gets panicky. In these circumstances it’s best to use a stop loss and square off the position or wait for a few hours before deciding whether to average or not.  In India there is an old jewelers in Indore who lost crores of rupees due to average in gold and silver. This jeweler was short in gold and silver and was averaging at every price rise on expectation that there is a limit to which gold and silver prices can rise. Last week he squared off all his positions and incurred unimaginable losses. I am one of those advisors who is against averaging. I would rather exit the position and take a fresh call.   The Iran issue is not yet over. There could be the danger of sanctions on the oil rich nations over the coming weeks. Have the patience and use the dip to go long. This is the last trading day of the week and traders will prefer to go long than short. We have the G7 meeting over the weekend where oil prices will be on the agenda.
GOLD
Gold needs to close over $603.80 to prevent further losses next week. On the lower side $614.20 is the initial support with $594.00 as the key short term support. $624.00 and $652.30 are the resistance zones.
SILVER
Silver needs to close over $1246.00 to prevent further losses next week. $1158, $1133 and $1108 are support levels with $1063 as the key short term support. $1333, $1394 and $1445 are the resistance levels. Silver could reach our near term target of $1076 sooner than later.
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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
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for any losses incurred in connection with any decision made, action or inaction taken by any
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-- Posted Friday, 21 April 2006 | Digg This Article

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