-- Posted Monday, 24 July 2006 | Digg This Article

INSIGNIA CONSULTANTS
Precious Metals Market Update for 24th July, 2006
GOLD	SILVER
COMEX GOLD AUGUST FUTURE -- $617.40	COMEX SILVER SEPTEMBER FUTURE -- $1081.00
EXPECTED TRADING RANGE
GOLD -- $603.20 -- $645.50	SILVER -- $1008.0 - $1135.00
COPPER AND CRUDE OIL -- EXPECTED TRADING RANGE
COPPER SEPTEMBER -- $319.10 - $352.30	NYMEX CRUDE OIL AUGUST  - $72.65 - $78.10
MULTI COMMODITY EXCHANGE OF INDIA (MCX)
GOLD AUGUST FUTURE/10 GRAMS	SILVER SEPTEMBER FUTURE/KG
Rs.9,120- Rs.9,660	Rs.16,6050 - Rs.17,600
COPPER AUGUST FUTURE	CRUDE OIL AUGUST FUTURE
Rs.319.60 - Rs.358.90	Rs.3,360 - Rs.3,550
GENERAL MARKET CONDITIONS
Bulls and Bears fought like Bush and Saddam Hussein last week and this is battle may continue this week also. Bears had the edge last week after traders booked profit. Gold and silver current future fell to a low of $616.10 and $1075.00 in Asian trade. Copper fell nearly 10% last week. The US dollar weakened as Bernanke signaled that the Fed interest rate raising spree could end after August.   There is a war like situation in Middle East with Israel having the blessing of US president Mr. Bush. Israel is more or less invading Lebanon, US is even sending latest arms and ammunitions to Israel to fight Hezbollah and Lebanon. Gold and silver are unnerved by the same. Sounds fishy! There is a flight of capital by investors into their own country. It’s only the Middle East demand that is driving gold and silver higher as there is nearly zero demand in other parts of the world. Technical knock down in gold and silver also contributed to the fall in bullion.   Do not write off gold and silver. The great Indian demand should start two weeks from now and will continue for the rest of the year. If Iran and Syria are dragged into the clashes between Israel and Hezbollah then gold and silver will rise at the same pace in which it has fallen. Crude oil prices have formed a higher support base above $70.00 and a weaker US dollar will also support gold and silver.   China raised the bank reserve ratio for the second time in two months to curb excessive lending to cool down the red hot economy, which registered a searing growth at 10.9 per cent during the first half of the year. The People`s Bank of China (PBoC), the apex bank, announced that it will raise the reserve ratio for commercial banks by 0.5 percentage point to 8.5 per cent from August 15. China is trying to unsuccessfully cool down its economy. A sustained slowdown in China will result in long term bearishness for base metals.   Higher crude oil prices has resulted in higher inflation and has started a interest rate raising spree by central banks. Higher interest rates will reduce short term liquidity. After the Y2K effect, most of the central banks including Fed cut interest rates and boosted money supply to start growth in their respective countries. This resulted in huge free money being available to speculators in the disguise of hedge funds to manipulate anything they wanted. The end result scams like Enron, Freddie Mac and the rest. India and China came from 2002 and the demand from these two countries started forcing pressure on commodity prices. The speculators/hedge funds had the free money and made a windfall by jerking up commodity prices. In 2006 commodity induced inflation is having a trickle down effect and is pinching the man on the street. There are early warning signals of a global slowdown.  Even the bank of Japan was forced to increase interest rates this month.   Gold and silver are the best hedge against ever rising inflation and also against a global slowdown.  A global slowdown will result in stocks and equity markets in developed nations taking a plunge. (India and other emerging market stocks will be affected in the long term even if the US and European stocks fall). In the event of global slowdown hard assets classes will be the preferred mode of investment than paper assets like equities and treasuries. Gold, silver, platinum and palladium are the best hard assets. The current summer dip in gold and silver are excellent long term buying opportunities. The risk to return ratio is clearly in favour of the buyer. Short term investors should remain invested and average out when a bottom is formed on the long positions. One can also buy call options on sharp declines. The spread between August and December gold future should widen this week as August future expire.
GOLD
$609.15 is a strong support for gold and a consolidated fall below the same will result in further losses to $592.72 and $582.00. On the higher side $623.90 is the initial resistance with $637.00 and $645.00 as the key resistance
SILVER
Silver needs to hold $1041 and $1012 to prevent further losses to $966 and $947. On the higher side $1120 and $1135 are the initial resistance with $1170 as the key short term resistance.
Happy Profitable Trading
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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.

-- Posted Monday, 24 July 2006 | Digg This Article

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