Silver managed to hold on to the 200 day MA of $1088 while gold is trading near the 200 day MA of $590.00. There current rise in gold and silver is technical bounce and if they are able to hold onto to the same, we could be nearing a bottom for the rest of 2006. There will be an air of uncertainty for the US dollar before the G7 meeting as historically it has weakened significantly after the G7 meeting. Crude oil prices are hovering the $64 mark, as crude oil prices near $60 mark, value based buyers would prevent a fall below the same.
One can partially invest in gold and silver for the long at the current but not fully invested. There are voices in the financial world that if the equity markets rise further there will be a flight of capital from commodities to equities. The year on year return on gold and silver has been much higher than the average return in stock markets of developed nations. (Indian equities have outperformed gold and silver). Equity markets are rising because of stability in global interest rates. Interest rates will rise once again as inflation is here to stay. In the short term there could be flight of capital from commodities to equities but in the medium to long term the reverse will happen. Every man on the street will need to have a certain percentage of his investments in commodities, else he will be missing something.
Economic number as well as Iranian issue failed to impact the US dollar as well as gold and silver. US is still trying to convince European Union that sanctions need to be imposed on Iran even as EU continues with diplomatic with Iran. Any news of sanctions on Iran will result in gold and silver paring all its losses.
GOLD -- DECEMBER FUTURE
Gold faces initial resistance at $600 and $609 with key weekly resistance at $618.80. On the lower side $586.50 is the initial support with $574.80 as the key short term support.
SILVER -- DECEMBER FUTURE
Silver needs to break $1160 for $1212 and $1320. On the lower side $1102 is the key short term support and only a daily close below the same will result in further losses to $1062.00.
Happy Profitable Trading
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