Gold and silver tumbled on a combination of lack of physical demand due to London market close, fall in crude oil prices and lack of major market moving news. Indian demand was subdued yesterday. Gold December future fell to a low of $631.00 while silver September future fell to a low of $1196.00 before settling at $631.20 and $1240.00
In India there is a shift in jewellery demand. In the past 100% gold jewellery was in demand. Now diamonds and platinum is catching the fancy of Indians where the gold content in these jewellery in minimum. (In fact we are recommending investors to buy diamond stocks for long term investments as valuations look cheap). Artificial jewellery is also catching up. Then there are certain new type of ornaments where in the top layer is of gold while inside its brass. These shift in retail preferences for gold jewellery has resulted in jewellery demand not rising at the expected pace. However a new investors class has come up which are investing in gold bars as a mode of investment. The general sentiment in India is that people are waiting for gold to fall to $600 so that they can start buying gold. Retail investors as well as traders are waiting for the same.
Technically both gold and silver are bearish and today’s close will set the pace for the rest of the week. Economic numbers from US will add to volatility.
GOLD -- DECEMBER FUTURE
Gold certainly not out of the woods and needs to hold $616.80 on closing basis to prevent a slide to $594.60. Initial support stands at $626.80 and $623.20. Resistance is at $634.50 and $639 and key short term resistance at $645.50.
SILVER -- SEPTEMBER FUTURE
Silver needs to hold $1207 on closing basis to prevent a slide to $1162 and $1137. There will be sellers over $1250 unless there is a convincing break of $1268. A convincing break of $1268 will result in $1292 and $1320.
Happy Profitable Trading
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