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-- Posted Wednesday, 19 July 2006 | Digg This Article
INSIGNIA CONSULTANTS | Precious Metals Market Update for 18th July, 2006 | GOLD | SILVER | COMEX GOLD AUGUST FUTURE -- $630.10 | COMEX SILVER SEPTEMBER FUTURE -- $1059.00 | EXPECTED TRADING RANGE | GOLD -- $618.20 -- $656.50 | SILVER -- $1008.0 - $1166.00 | COPPER AND CRUDE OIL -- EXPECTED TRADING RANGE | COPPER SEPTEMBER -- $339.10 - $372.30 | NYMEX CRUDE OIL AUGUST - $72.65 - $78.10 | MULTI COMMODITY EXCHANGE OF INDIA (MCX) | GOLD AUGUST FUTURE/10 GRAMS | SILVER SEPTEMBER FUTURE/KG | Rs.9,330- Rs.9,840 | Rs.16,050 - Rs.17,100 | COPPER AUGUST FUTURE | CRUDE OIL AUGUST FUTURE | Rs.348.60 - Rs.382.90 | Rs.3,460 - Rs.3,675 | GENERAL MARKET CONDITIONS | Gold and silver had a technical knock out as gold fell $27.20 and silver fell $0.74 in a single day. Gold August future fell to a low of $628.30 while silver September future fell to a low of $1051 in Asian trade. The US dollar gained after the PPI numbers showed that the Fed will raise interest rates in August. On Monday I wrote that gold could be headed for $800 and I have been asked yesterday whether I maintain my target. I maintain view of $800 in the coming months. Gold was rising due to war like situation in the middle east and gold fell this week and pared all its gains as tensions somewhat eased in the middle east. There is also some profit taking and short positions being created ahead of the Bernanke’s semi – annual testimony. However tensions between Israel, Lebanon and Hezbollah are not over yet. Israel said its offensive in Lebanon could last several more weeks and involve large numbers of ground forces, casting doubt on diplomatic efforts to broker a cease-fire. Prime Minister Ehud Olmert said two Israeli soldiers captured by Hezbollah had to be released and Hezbollah must pull back from the border for fighting to halt. It’s difficult to comment where the situation in the Middle East is headed. Traders who are short will be on the toes to reverse their positions and go long. Silver is a precious metal as well an industrial metal. Gold is a hedge against geopolitical risk while silver is not. Industrial demand for silver will see a rise from August which will support silver from a slide. The current fall and further fall in silver over the next two to three weeks will provide one of the best investment opportunities for the medium to long term investor. Silver will rise faster than gold on a year on year basis and the annualized return will be far higher than gold. Since silver is one of the most volatile commodities, low risk traders can buy far dated call options on declines when premiums are low. In India I found that there were more investors willing to invest in silver than gold and a large numbers of them were caught long over $1140 and stopped out yesterday. In Punjab jewelers and investors brought physical silver over $1170 (despite asking them not to do so). Investing in commodities is just like investing in equities and one needs to choose carefully the commodity to invest. It’s not that gold, silver, copper, zinc, aluminum, crude, sugar, wheat etc will rise at the same. In MCX particularly I have observed that if any of the metals rise sharply, say gold rises, then silver, copper, aluminum will also rise in MCX without any rise in international prices. This strategy back fired to these types of traders and investors as silver did match the rise with gold. This is particularly for the retail investors who incur losses. Foreign treasury flows into US in the month of May expected to only increase by $58.4 billion, actually exceeded the same month’s trade deficit, rising by $69.6 billion. Yet not all news was goods news, central banks actually dumped $14.3 billion worth of bonds, the largest amount in over seven years (validating the trend of reserve diversification). In addition, the NAHB homebuilders’ index fell to the lowest level in 14 years. This indicates that even though inflation pressures remain high, there are clear signs that the economy is beginning to weaken and should the Fed persist with their interest rate hikes, they will at the same time raise the possibility of a recession. Gold is the best hedge against rising interest rates and global slowdown. Gold and silver will be volatile with the possibility of gold testing the 100 day MA at $610 and silver testing the 200 day MA at $1008. | GOLD | Gold needs to hold 100 day MA of $610 to prevent a retest of $587.60. There is an initial support at $622.20 and $613.40. On the higher side gold needs to close over $645 for further gains to $656.00. | SILVER | Silver needs to hold $1008 to prevent a fall to $932 and $878. On the higher side $1190 and $1120 are the resistance levels with $1167 as the key short term resistance. | | Happy Profitable Trading | | For SMS and Yahoo support please mail at sms@insigniaindia.com | | 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 Wednesday, 19 July 2006 | Digg This Article
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