-- Posted Monday, 12 June 2006 | Digg This Article

 

GOLD	SILVER
COMEX GOLD AUGUST FUTURE -- $610.60	COMEX SILVER JULY FUTURE -- $1109.00
EXPECTED TRADING RANGE
GOLD -- $588.10 -- $638.90	SILVER -- $1030.00 - $1188.00
COPPER AND CRUDE OIL -- EXPECTED TRADING RANGE
COPPER JULY -- $312.30 - $362.30	NYMEX CRUDE OIL JULY  - $69.17 - $74.20
MULTI COMMODITY EXCHANGE OF INDIA (MCX)
GOLD AUGUST FUTURE/10 GRAMS	SILVER JULY FUTURE/KG
Rs.9,020- Rs.9,420	Rs.16,300 - Rs.18,300
COPPER JULY FUTURE	CRUDE OIL JULY FUTURE
Rs.309.60 - Rs.362.00	Rs.3,320 - Rs.3,600
GENERAL MARKET CONDITIONS
Gold and silver fell the previous week on a combination of a stronger US dollar, sell of in equity markets and higher global interest rates. This is a new week and there are economic numbers from US which could just change the market direction of gold and silver as well as the US dollar. The retail sales numbers, CPI, PPI could prevent the Fed from raising interest rates in the 30th June meeting, if any of them are lower. If there are any signs of a pause in Fed interest rates then gold and silver will skyrocket and the US dollar can also slide. These numbers will be the key market mover/shaker for the week.   Germany agreed to allow Russia to make early repayment of 1.3 billion euros of Soviet-era debt as part of a broader agreement within the Paris Club. Russia will repay the debt at face value. The two countries failed to agree on early repayment of 6.4 billion euros' worth of Soviet-era debt that former German finance minister Hans Eichel packaged as bonds and sold to investors in 2004. Russian debt to the Paris Club stands at about $22 billion, including the securitized bonds sold by Germany, Russian Finance Minister Alexei Kudrin said that he hoped to reach a final decision on the remaining debt ``in the next week or two.'' Paris Club members will meet later this month to start negotiations. Higher oil prices are benefiting countries like Russia. Russia is using the oil proceeds to pre-pay its debt and at the same time increase its gold reserves. Russia will buy euro’s at lower level which will prevent any major US dollar gains. Gold and silver will rise as a result of Russian pre payment of its debt.   Russia wants to move towards full convertibility so that its crude oil can be billed in roubles. Iran has been given time till 29th June to respond positively to the combined US and Europe proposal. Europe is highly dependent on Russian gas for its energy needs. It’s all about the politics of energy or crude oil for gold and silver as well as foreign exchange markets for the time being. Iraq was attacked on the pretext of terrorism so that US and its allies have control over Iraqi oil. The same they are trying to do it Iran, this time the pretext is nuclear weapons. There are all bullish developments for gold and silver as uncertainty will lead for fresh investments in safe havens.   The US economy is showing signs of a slowdown as crude oil floats over $70 a barrel. Fed has it to increase interest rates so that the foreigners fund the US economy and to ensure that the US dollar remains as the worlds reserve currency. Fed will be least bothered about short term fall in US economic growth. Europe and Japan are coming out of recession and raise interest rates, there will further pressure on the US dollar to depreciate. The end result is higher gold and silver prices. The Fed can prevent gold and silver rise in the short term but in the long run they will be breathless. The world is switching away from a US dollar standard to a gold standard in the coming years and 2006 is a transition year.   China posted a record 13.0 bln usd trade surplus in May, up from 10.46 bln usd in April, according to statistics from the General Administration of Customs.  The Chinese administration said that the trade surplus for the first five months of the year reached 46.79 bln usd.  China's exports in May rose 25.1 pct year-on-year to 73.11 bln usd, while imports rose 21.7 pct to 60.11 bln usd. For the first five months of the year, exports increased 25.7 pct to 347.32 bln usd. Imports for the period rose 22.0 pct to 300.53 bln usd. China is more of an export dependent economy despite its huge population and the numbers suggest that world economic growth over near five percent is here to stay despite record crude oil prices. The Chinese economy will not cool down as exports rise. Copper, Zinc Aluminum will benefit more apart from gold and silver.  The bearish factors are for gold and silver this week could be the continued sell off in global equity markets, rise in global treasury yields and a stronger US dollar. However in our view gold and silver should bottom this week as traders start building their inventory and long term trader’s start making their investments.
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 break and close over $1126.50 for further gains to $1220, else there will be sellers over $1150. On the lower side $1060 and $980 are the support levels.
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-- Posted Monday, 12 June 2006 | Digg This Article

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