-- Posted Tuesday, 20 June 2006 | Digg This Article

GOLD	SILVER
COMEX GOLD AUGUST FUTURE -- $567.10	COMEX SILVER JULY FUTURE -- $987.50
EXPECTED TRADING RANGE
GOLD -- $544.80 -- $589.40	SILVER -- $870.20 - $1133.00
COPPER AND CRUDE OIL -- EXPECTED TRADING RANGE
COPPER JULY -- $292.30 - $336.30	NYMEX CRUDE OIL JULY  - $66.15 - $72.20
MULTI COMMODITY EXCHANGE OF INDIA (MCX)
GOLD AUGUST FUTURE/10 GRAMS	SILVER JULY FUTURE/KG
Rs.8,280- Rs.8,760	Rs.14,100 - Rs.15,900
COPPER JULY FUTURE	CRUDE OIL JULY FUTURE
Rs.292.60 - Rs.328.60	Rs.2,980 - Rs.3,280
4-5 MONTHS TARGET – Worst Case Scenario.
GOLD: $650 - $655	SILVER : $1250 - $1300
GENERAL MARKET CONDITIONS
Gold and silver fell on concerns of higher interest rates and higher investment in treasuries. Gold August future settled at $572.40 while silver July future fell to a low of $997.00. The US is firm while crude oil prices are under $70 a barrel.   The US housing market is showing more signs of giving way, which is an extremely dangerous development for the US economy.  The National Association of Home Builder’s confidence index fell from 46 to 42 to an eleven year low.  Homebuilders are becoming increasingly pessimistic on the future outlook for sales as prospective buyers begin to dissipate.  Even if we do not see an immediate slowdown in new or existing home sales, we will probably begin to see the rapid pace of new home construction slow significantly.  This trend will have ripple effects far beyond the construction sector to the viability of real estate agents and brokers as well as the profitability of home improvement stores. The question that remains is whether there will be soft landing or an all-out collapse.  So far, the US housing market only appears to be cooling. The effect of a slowdown in US housing market on the US economy and retail demand will be felt over the coming months and the US dollar will once again sell a see off. Euro at 1.32 is a possibility. Gold and silver will rise as a result of the sell off in the US dollar.   Base metals such as copper, aluminum etc are falling as slowdown in US economy. Copper started its one way rise from May 2006 from $131.00 to $400.00. The rise resulted in end industrial user maintaining high levels of inventory or buying Comex futures as an hedge. Suppose “X Inc” maintained used to maintain a copper inventory of 15 day needs in May 2006. The ever rising prices of copper resulted in “X Inc” increasing inventory levels to 60 day in April 2006. This is a four fold increase in copper demand in 12 months time. In June/Now copper prices have fallen. “X Inc” will now use a part of the 60 day copper inventory and also reduce the copper inventory to say 45 days. This will result in further declines in copper and other base metal prices to justified levels as companies reduce their base metals inventories. (This is based on the assumption that the current global growth will be maintained). The only risk to higher base metal prices are that the per capita consumption of base metals in India is one –fifth of global average and if per capita consumption of base metals from India nears global average, another January to April rise will be in the offing.   North Korea missile testing has re surfaced once again. North Korea does not control a large part of the world’s oil stockpiles like Iran does, their proximity to Japan and the US’ already difficult relations with them still makes their threat risky.  If tensions escalate and North Korea moves forward with testing of their long-range missile, gold and silver will skyrocket on demand from Japanese investors.   Gold and silver bullish in the long run and but may trade with a softer bias till the Fed meeting and should rise after the Fed meeting. As long as gold holds $537.60 and silver $870.00 on closing basis the downside is limited.
GOLD
Gold needs to hold the 200 day MA at $552.50 and as long as it holds on closing basis the downside is limited. A consolidated fall below $552.50 will result in test of key support of $537.60 and 2006 low of $519.80.
SILVER
Silver needs to hold $974.00 to prevent a fall to 935.0 and $870.00. On the higher side $1012 is the initial resistance with $1041 and $1071 as the key intra day resistances.
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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.
Prepared By Chintan Karnani. Web Site:www.insigniaindia.com

-- Posted Tuesday, 20 June 2006 | Digg This Article

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