Gold and silver had a technical knock out yesterday. Gold December future fell to a low of $621.70 while silver September future fell to a low of $1189.0.Lower crude oil prices and reduction in inflationary risk was the prime reason for the sell off. The US dollar gained on expectations that lower crude oil prices will restore US consumer confidence.
Everybody is buying gold and silver in december future on dips. Every body is bullish in gold in medium to long term. However there are also bearish factors. Lower crude oil prices are the first bearish factor for gold. There is still some hurricane premium in crude oil futures. Nature does not say when and where it will strike. Reduction in Middle East tensions is the second bearish factor for gold and silver. Despite the long term bullishness, we need to have a relook at the pace of rise of gold and silver. A slowdown in Indian and Chinese economy will negatively affect prices, which seems highly unlikely at the moment.
However gold and silver are still in a secular bull market. The current correction is the summer correction with minimal volumes and provides yet another opportunity for entry at lower levels. Gold and silver demand from India, china and other emerging markets will be on the rise as their economies grow. US and other developed nations are not gold hungry nations so any slowdown in these economies will not affect the bullishness in gold and silver.
For the day there could be further correction gold and silver depending on the technical and crude oil prices.
GOLD
Gold needs to hold $621.50 on closing to prevent a slide to $595.0. On the lower side $634 is the initial resistance with $643 as the key short term resistance.
SILVER
Silver is still firm and needs to hold $1172 on closing basis to prevent a slide to $1135 and $1071 next week. On the higher side $1224 is the initial resistance support with $1237 as the key short term resistance.
Happy Profitable Trading
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