-- Posted Friday, 9 June 2006 | Digg This Article

 

GOLD	SILVER
COMEX GOLD AUGUST FUTURE -- $613.60	COMEX SILVER JULY FUTURE -- $1115.00
EXPECTED TRADING RANGE
GOLD -- $588.10 -- $638.90	SILVER -- $1030.00 - $1188.00
COPPER AND CRUDE OIL -- EXPECTED TRADING RANGE
COPPER JULY -- $314.40 - $362.30	NYMEX CRUDE OIL JULY  - $68.20 - $74.20
MULTI COMMODITY EXCHANGE OF INDIA (MCX)
GOLD AUGUST FUTURE/10 GRAMS	SILVER JULY FUTURE/KG
Rs.9,100 - Rs.9,400	Rs.16,300 - Rs.18,300
COPPER JULY FUTURE	CRUDE OIL JULY FUTURE
Rs.316.30 - Rs.362.00	Rs.3,320 - Rs.3,600
GENERAL MARKET CONDITIONS
The rate race among all the central bankers of the world to raise interest rates has started. The Korean central bank raised interest rates, the Reserve Bank of India raised the reverse repo rate by 25bps, the European Central bank raised interest rates by 0.25% yesterday. Suddenly more and more central banks are concerned about rising inflation and are taking measures to check it. Emerging markets like India are under a compulsion to raise interest rates as they need to maintain the interest rate competitiveness. The US dollar has gained on expectations that interest rates will continue to harden even after June. Gains in US dollar has resulted in de-hedging by the carry traders which has resulted in the current slide in gold and silver. The fall in commodity prices is also a ploy by Fed under Bernanke to control inflation.  There is no political news or economic news to distract investors from interest rate issues. Retail investors are withdrawing their investment from all over the globe and bringing it back to their parent country. This has resulted in the sell of equity markets and liquidity pressures. The net asset value (NAV) of investors of their investments in mutual funds, commodity funds, pension funds, etc is eroded between 10% to 20% over the past 4-5 weeks. The panic or nervousness among retail investors is logical. In India some of the stocks have lost more than 60% over the past four weeks. Long term investors are staying invested but it is short term investor which spikes up or down the prices on a daily basis. After nearly a year gold and silver are seeing a correction and for the first time short positions are being created. The creation of short positions is the next best thing to happen for a sustained medium to long term bullishness in gold and silver. When short positions get squared off, the effect on gold and silver will be like a nuclear explosion and the rise will be even faster than the current slide. This is not the time for long term as well as medium term investors to panic. One should start investing little bit in gold and silver and use every $15 – $20 decline in gold prices and $0.50 decline in silver prices to add to the long positions. I do not look at gold below $500.00 and silver below $9.60 at the moment. There is some more downside risk in gold and silver which are long term investment opportunities. Instead of investing in futures markets one should look at the possibility of buying physical gold. Indian demand for jewellery is high and Indian’s should plan their 2006 -2007 gold demand and think to start buying gold on declines. Gold and silver will definitely offer better returns than some of the mid –cap Indian stocks. Gold is the best hedge against rising inflation and a slowdown in global growth. Silver is a sleeping dinosaur and once it starts to roar rest will shiver.  We have the US trade numbers today and the US dollar should give up some of the gains. It’s the last trading day of the week and some of the short positions should get squared off. Gold and silver should find support at lower levels.
GOLD
Gold needs to hold $601.10 on closing basis to prevent a fall to $588.60. On the higher side $623.20 is the initial resistance with $638.00 as the key short term resistance.
SILVER
Silver needs to close over $1122 to prevent a fall to $1060 and $980 next week. On the higher side $1064 is the initial resistance with $1220 as the key resistance.
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
of the individual analyst, In no event shall Insignia Consultants or its employees  have any liability
for any losses incurred in connection with any decision made, action or inaction taken by any
party  in reliance upon the information provided in this material; or in any delays, inaccuracies,
errors in, or omissions of Information.

-- Posted Friday, 9 June 2006 | Digg This Article

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