Gold and silver continued to be dictated by crude oil prices as well as the US dollar. Nonetheless gold and silver are floating over their key long term resistances. It’s the last quarter of 2006 and traders and fund managers will soon start taking their positions based on their outlook towards their close of the year.Crude oil prices are trading $60-$64 range for the time being. Crude oil producing nations are resorting to production cuts to prevent it from falling.
The Fed is expected to continue to hold interest rates for the rest of the year. However if crude oil prices once again see a sharp and sustained rise over the next three months, markets expectations on stable US as well as global interest rates would change. Gold and silver will benefit the most as and when inflationary pressures rise.
Our survey with gold and silver jewelers in different parts of India suggest that most of the jewelers are very optimistic of demand even after Diwali if gold and silver prices do not rise sharply from the current levels. In some parts of India physical gold is trading at premium to the spot prices as and when there is a supply squeeze. Demand factors will prevent gold and silver from a major fall unless there a technical breakdown below the key long term supports.
GOLD -- DECEMBER FUTURE
As long as $598.50 holds on closing basis the downside is limited for gold. On the higher side gold needs to break $614 for further gains to $521. Only a consolidated fall below $598.50 will result in retest of $586.50.
SILVER -- DECEMBER FUTURE
As long as silver holds $1137 on closing basis, the downside is limited. On the higher side $1192 and $1220are the initial resistance levels with $1242 as the key short term resistance. Only a consolidated fall below $1137 will result in retest of $1106.
Happy Profitable Trading
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Prepared By Chintan Karnani. Web Site:www.insigniaindia.com
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