Gold and silver are finding sellers at higher levels. Gold December future settled at $636.0 while silver September future settled at $1226.50. Apart from Iran there is lack of major market moving news. The US dollar has gained after a large drop in German economic confidence.
It’s the central bank gold sales that has prevented gold from rising. Central bank gold sales could accelerate over the next few weeks as the September 26 deadline for the current central bank gold agreement approaches, as any shortfall in the 500 tonne quota cannot be carried over to next year. Once this gold gets absorbed in the markets and demand from Asia starts to pick up gold will once again start is northward journey. The manipulation of gold prices by central banks is now virtually over. If one central bank is selling gold, there are other who are buying it. The current dips and further dips provide opportunities for long term investment.
The markets are buzz with speculations that hedge and financial institutions are reducing investments in precious metals and base metals and increasing investments in agri commodities. With passing of each second there are more mouths to feed than the previous second in this planet. Demand for food is rising every second while the area under cultivation is falling as land is used for creating infrastructure for the every rising population. Global warming is having effect on crop production, like the loss of wheat production in Europe and US this year. Agri commodities like wheat sugar, soyabean still do provide excellent long term investment opportunities and hedge funds are entering the same. However agri commodities are perishable in nature. Gold, silver and other precious metals retain the same form year on year and are still best the best investment hedge against a global slowdown. Even if investment by hedge funds in gold and silver are reduced, gold and silver will still maintain its bullishness as more and more retail investors invest.
Iran is the focus of the global financial market. Iran's Supreme Security Council on its response to a European Union-led offer of incentives, didn't mention whether the country will stop enriching uranium to allay concerns it is trying to build a bomb. Halting enrichment is the main condition in the EU plan. Yesterday Iran attacked and seized control of a Romanian oil rig today in the Persian Gulf, one week after the European company removed another of its rigs from Iranian waters because of non-payment of fees. Different Iranian officials sing different tunes on nuclear issue. US president Bush wants sanctions on Iran, However sanctions will not prevent Iran from getting nuclear arms. To attack or not to attack is the relevant question. Gold and silver will rise if there are sanctions or attack.
How US president Bush handles Iran will depend on his rating in his country USA. US state elections are in November. US economy is slowing down and the man on the street is debt ridden. Mr. Bush will try to use Iran as a diversionary tactic to ensure that his party wins the state elections in November.
GOLD -- DECEMBER FUTURE
The rise in gold was fake and gold needs to close over $643.50 to be in bullish zone. Support stands at $626.80 and $623.20 with the key short term support at $616.80. Resistance is at $634.50, $639.
SILVER -- SEPTEMBER FUTURE
A break of $1259 will result in $1320 very quickly. On the lower side $1224 and $1212 are the initial support levels with $1188 as the key weekly support.
Happy Profitable Trading
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