A combination of higher crude oil prices and north Korean and Iranian tensions resulted in gold and silver trading with a firm bias. Gold August future rose to a high of $632.50 while September future reached a high of $1146.00 before settling at $629.70 and $1141.50. The US dollar is firm on reports estimating that the US economy created an astounding 368,000 jobs in June.
Crude oil touched a record $75.40 a barrel in after North Korea test-fired missiles into the Sea of Japan, raising concern that geopolitical conflicts may disrupt supplies. There is still a threat of supply shortfall as gasoline demand is not falling significantly. The higher gasoline prices didn't slow driving in US over the weekend. Our near term target $84.00 a barrel is nearing which could be breached this summer in Iran tensions escalate. These are all positive factors for gold and silver.
Yesterday the Equity markets were falling, the US dollar was gaining, treasury prices were falling but gold and silver were rising. Clearly the de-linkage between gold, silver and other global financial instruments. In India marriage season is nearing and end and there are no festivals before the second week of August. Physical demand from Indian will remain subdued. Its only the investment demand that will push up gold and silver.
It’s better to trade in the short term with the medium to long term trend. In India there are short positions at MCX gold august futures at INR 8550-INR 8600 and silver September futures between INR 16700 –INR 16800. Some ofthese positions are yet to be squared off. These short selling strategy will not pay in the long term. Unless the geopolitical risk subside, gold and silver will rise which could lead to a break out of short term technical resistances.
GOLD
Gold targets $639.40 and $676.80. On the lower side $613.40 and $602.60 are the support levels and as long as $602.60 holds on closing basis the downside is limited.
SILVER
Silver targets $1162 and $1246. On the lower side $1110 and $1071 are the initial support with $1008 as the key short term support level.
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