-- Posted Wednesday, 31 May 2006 | Digg This Article

GOLD	SILVER
COMEX GOLD AUGUST FUTURE -- $659.20	COMEX SILVER JULY FUTURE -- $1297.00
EXPECTED TRADING RANGE
GOLD -- $633.30 -- $696.00	SILVER -- $1188.0 - $1380.50
COPPER AND CRUDE OIL -- EXPECTED TRADING RANGE
COPPER JULY -- $356.40 - $398.30	NYMEX CRUDE OIL JULY  - $68.20 - $74.20
MULTI COMMODITY EXCHANGE OF INDIA (MCX)
GOLD AUGUST FUTURE/10 GRAMS	SILVER JULY FUTURE/KG
Rs.9,660- Rs.10,220	Rs.18,300 - Rs.21,400
COPPER JULY FUTURE	CRUDE OIL JULY FUTURE
Rs.348.80 - Rs.396.40	Rs.3,100 - Rs.3,500
Gold and silver are unable to sustain at higher price levels as traders and investors are using every rise to exit at long positions at higher prices. Gold August future rose to a high of $671.50 before settling lower at $660.50. Falling equity markets are creating the liquidity pressures, which is preventing short term hot money to enter gold and silver. Gold June futures expiry today is also acting as a catalyst to the fall in gold prices. Copper fell on auction by China’s state bureau which could lift up global inventory. The US dollar pared some of its losses against the major currencies after Hank Paulson, Goldman Sachs’ chief executive, was named as the new US Treasury secretary, replacing John Snow.   It’s all about liquidity in every global financial market. A falling equity markets results adversely affects the prices of gold and silver. Lower commodity prices results in commodity stocks falling every sharply which drags down the equity markets further. At lower levels value based buyers buy gold and silver which lifts up both equity markets as well as commodity markets. However commodity markets are affected by the movement of the US dollar while the equity markets are affected more by interest rate factor than by the US dollar. This is the short term to medium term picture for equity markets as well as commodity markets. Most of the traders in India as well as other parts of the world are of the view that equity markets have topped out for 2006 in developed nations as well as emerging nations such as India. I disagree with them as I expect the Fed to pause or cut interest rates towards the close of the year to stimulate US consumption. If the global consumers if burdened with higher oil prices as well as higher interest rates then the current rate of global growth of over 4% will come down by half over the coming years.   Every country and every financial market is interest rate sensitive. Even Indian and Chinese growth rates could come if their central banks raise interest rates beyond acceptable levels. In India short term interest rates have gone up sharply over the past few months by more than 1.50%. Manufacturing firms will have to pass on the effect of higher wages, interest etc to end consumers which could affect consumption. Gold and silver will remain unaffected by shifts in global consumption pattern. Speculative activity which was witnessed between January 2006 to 15th May 2006 in gold, silver and most of other commodities will come down. The rise in gold and silver is there but the speed will slowdown and there will pullbacks with the lower base getting higher with passing of each month.   Hank Paulson, Goldman Sachs’ chief executive, was named as the new US Treasury secretary, replacing John Snow. Mr Paulson has extensive links with China and some saw him as potentially better equipped than his predecessor to encourage Beijing, and the wider emerging Asian bloc, to allow a faster appreciation of the renminbi in order to help reduce global economic imbalances. Mr. Paulson prides himself of having visited China over 70 times in the last 16 years and his company was very much involved in the Bank of China IPO earlier this month. Paulson has a great track record of doubling his staff at Goldman Sachs, boosting profits last year by 24 percent, broadening into China and shifting the company’s main focus from underwriting to trading.  The question will be whether the new Treasury Secretary finds himself bumping heads often with the President or if he can actually becomes a reliable adviser and decision maker. Bush is just trying to increase his every falling rating through the appointment of Mr. Paulson. US president Bush wants to say that now that he has appointed a Chinese specialist all US economic woes will vanish like a magic wand. Pressure on the US dollar will not go away as net long US dollar positions will not increase unless Paulson achieves the extraordinary.   Today is a very crucial day for gold and silver and if they are able to break and close over key technical resistances, then there could be some short term spikes, else current the rise  is fake.
GOLD
Gold needs to break $678.80 for $702.40 and $720. On the lower side $648.20 is the initial support with $635.60 and $613.40 as the key support levels.
SILVER
Silver needs to break and close over $1340 for $1426 and $1480. On the lower side $1266 and $1220 are the initial support levels with $1188 as the key short term support.
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-- Posted Wednesday, 31 May 2006 | Digg This Article

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