-- Posted Wednesday, 10 May 2006 | Digg This Article

GOLD				SILVER
COMEX GOLD JUNE FUTURE -- $700.40				COMEX SILVER JULY FUTURE -- $1437.00
	Lower	Expected	Higher		Lower	Expected	Higher
BUY	672.00	688.00	716.30	BUY	1313.00	1392.00	1508.00
SELL	684.00	716.60	735.00	SELL	1362.00	1492.00	1545.00
EXPECTED TRADING RANGE
GOLD -- $669.50 -- $720.30				SILVER -- $1313.0 - $1550.50
COPPER AND CRUDE OIL -- EXPECTED TRADING RANGE
COPPER JULY -- $338.50 - $382.40				NYMEX CRUDE OIL JUNE  - $66.82 - $75.20
MULTI COMMODITY EXCHANGE OF INDIA (MCX)
GOLD JUNE FUTURE/10 GRAMS				SILVER JULY FUTURE/KG
Rs.9,900 - Rs.10,550				Rs.20,600 - Rs.28,200
COPPER JULY FUTURE				CRUDE OIL MAY FUTURE
Rs.336.90 - Rs.388.80				Rs.3,008 - Rs.3,410
GENERAL MARKET CONDITIONS
Gold and silver bucked the general direction of falling before the Fed meeting as gold June futures broke the $700.00 mark to a high of $702.90. Silver July future reached a high of $1453.00 before settling at $1448.00. The stand off between Iran and US over nuclear issues became worse after US president Bush rejected the Iranian president letter. The U.S. government said a letter from Iran's president hasn't reduced its determination to halt the Islamic republic's nuclear research.   The central bank foreign exchange diversification issue has once again come to gather pace as the US dollar depreciation swiftly. Global central banks would like a return on their investment enough to cover global inflation. A weakening US dollar will result in greater demand for non US dollar denominated assets including gold and silver. Some of China's economists are urging the country to quadruple its gold reserves to 2,500 tons from 600 tons.   The Securities and Exchange Board of India (Sebi) has issued further guidelines towards smoothening the launch of gold exchange-traded funds (ETFs). According to the new guidelines, the funds are to be benchmarked against the price of the metal in London. Since physical gold and other permitted instruments linked to gold are denominated in gold tonnage, it will be value based on the market price of gold in the domestic market and will be marked to market daily.  The market price of gold in the domestic market on any business day would be arrived at as under: Domestic price of gold = (London Bullion Market Association AM fixing in US$/ounce X conversion factor for converting ounce into kg for 0.995 fineness X rate for US$ into INR) plus custom duty for import of gold plus sales tax/octroi and other levies applicable,” the circular pointed out.  The guidelines, which have been issued on the basis of clarifications sought by major fund houses on the earlier ones brought out on January 24, 2006, also give the trustees of the fund the right to change the source or centre for determining the exchange rate provided they give the reason for doing so in writing. In India, UTI Mutual Fund has a tie-up with State Street Global Markets as an investment advisor for investing in overseas market which launched the first such openly tradable fund. Investment demand of gold from India will rise and gold prices could easily cross the $900 mark over the next few months on Indian gold ETF news.   Unless the Iranian issue is resolved once and for all gold, silver and other precious metals will see the lower support base getting higher. Funds and retails investors are going to invest more and more in precious metals gravity defying rise despite the calls for a technical correction. If crude oil rises over $84.00 a barrel without any help from nature then gold will replace sun.   Gold has a new higher support base at $652.0 while silver has a lower support base at $1286. These support bases will get higher with passing of each day. Technical charts are sent to trash for the time being as its more of a momentum play. We could see some profit booking ahead of the Fed meeting which should be used as an opportunity to go long for the laggards. It is preferable to use a combination of bull and bear spreads for higher returns and lower risk. Expect higher volatility as the day progresses. Stop losses are useless as they are bound to be hit.
GOLD
Gold targets $710.10 and $722.40 for $735 and $782.50 for $812.50. On the lower side the earlier support of $90 is the support level with $669.00 and $652.10 as the key short term support.
SILVER
Silver targets $1550.00 - $1600 if it holds $1420. On the lower side $1392 is the initial support with $1352 and $1313 as weekly support levels.
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prices of specific currencies, precious metals, base metals, or equity indices reflect the views
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-- Posted Wednesday, 10 May 2006 | Digg This Article

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