Gold and silver continued their fall this week too after Iran said it is ready to consider complying, at least temporarily, with a U.N. Security Council demand that it freeze uranium enrichment, which can be used in developing atomic weapons. Such a concession would be a major departure by Iran and would be a huge step toward defusing a confrontation over the program. What a way to begin the autumn trading. Markets were expecting gold and silver to rise after the summers but gold and silver were butchered last along with crude oil prices as. The US dollar gained on lack of major market moving news. Spot gold fell to $598.50 while spot silver fell to $11.86 in Asian trade. It seems every news is good news for the gold and silver bears.
The bullish view on gold as based on higher crude oil prices and that a diplomatic solution to Iranian issue will take time. It’s too early to comment on the outcome on the outcome of Iran’s nuclear ambitions.
Last weeks slide has resulted in long term investors getting jittery. Over the weekend we received mails as phone calls on whether to hold on to the investments made over $645 and silver at $1320 or exit. MCX traders had invested in gold December future between INR 9800 – INR 10200. The numbers it seems are huge. At the moment gold and silver are in a neutral zone for the short term but have room for further losses if there is a technical breakdown. If there is ten percent decline in investments in mutual funds and equities investors do not panic but gold and silver being relatively new investments class there is reason for invertors to panic. Gold and silver will fall further if there long term investors start exiting.
The G7 meeting is over the weekend. In 2004 September euro fell to a low of 1.2027 against the US dollar before the G7 meeting and thereafter rose to record 1.3668 in December 2004. The situation in similar in gold and silver in 2006. The US dollar should weaken after the G7 meeting so gold and silver should rise. Central bank gold sales will not be there after September. After the current fall investors are shying away from making any investment (physical and future) which is acting as a fodder to fire of falling prices.
There are a large number of US economic numbers this week which will include advance retail sales figures and consumer price index along with manufacturing and industrial production snippets. Unlike a one way traffic there should be volatility.
GOLD -- DECEMBER FUTURE
Gold could fall to $586.50 and $568.50 if we close below $609. On the higher side $634.50 is the initial resistance with $642.50 as the key resistance.
SILVER -- DECEMBER FUTURE
Silver can fall to $1225 and $1192 if it fails to close over $1258. On the higher $1292 is the initial resistance with $1344 as the short term key resistance.
Happy Profitable Trading
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