The technical movement continues in gold and silver as the summer trading nears an end. Gold and silver are also caught between the US dollar and crude oil prices. Lower crude oil prices eases the advantage of gold as an hedge against inflation. The minutes of the Fed August meeting and economic numbers from US suggest that the Fed will not raise interest rates in the near future. Once crude oil prices fall, gold and silver will also fall, but after sometime there will be de-linking between crude oil prices and bullion prices. At the moment, short term hot money is yet of flow into gold and silver, volumes have nosedived which has resulted in bears take charge.
In India and other parts of the globe there are long positions between $630 and $650 which have yet to be squared off. If gold falls below $592, then some of these long positions will be squared off further acting as fodder to falling prices. Investors and traders are waiting for a bottom before they can start purchasing gold. Once gold starts to rise, all the laggards will also start purchasing gold which should push up the prices. Bottom in gold and silver is yet to be formed. Silver and copper September future expiry is also volatility to these commodities. The 31st August deadline to Iran is nearing and markets will be waiting to see if sanctions are imposed on Iran. Technically both gold and silver are bearish.
GOLD -- DECEMBER FUTURE
Gold still needs to hold $616.80 on closing basis to prevent a slide to $594.60. Initial resistance stands at $626.80 and $634.50 and key short term resistance at $642.50.
SILVER -- DECEMBER FUTURE
Silver needs to hold $1202 on closing basis to prevent a slide to $1162 and $1137. There will be sellers over $1268 unless there is a convincing break of the same. A convincing break of $1268 will result in $1292 and $1320.
Happy Profitable Trading
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