It’s back to square one for gold and silver after a week as they tumbled on the back of lower crude oil prices falling below $60 a barrel and a stronger US dollar. After the current fall, investors are apprehensive of investing in commodities and some of them are rethinking on their long term investment. If commodity prices fall further there could more Amaranth like hedge funds who might have suffered losses but have yet to surface in the news. All these factors are preventing big money to flow into commodities.
Lower gold and silver prices will only boost demand from India. However after yesterdays slide, traders have lowered their inventory. Any way the first leg of Indian demand is over with Navratras. The next leg of Indian demand will come near 20th October for Diwali and Eid festivals. Higher incomes and well as rising stock markets will only result in greater demand for gold. There is less demand for silver than gold as Indian per capita income rises. Those who can afford are switching to platinum jewellery while lower income group are moving from silver to gold in India.
Crude oil prices will continue to dictate gold and silver prices. China is out of the market due to holidays. Chinese demand form next week will prevent gold and silver from falling. One should keep on booking profit at the current levels while long term investors should remain invested. A bottom should be formed in October or early November and thereafter gold and silver may not look back.
GOLD -- DECEMBER FUTURE
Gold needs to hold $574.20 to prevent further losses to $545. On the higher side $586.50 is the initial resistance with $598.50 and $608 as the key short term resistances.
SILVER -- DECEMBER FUTURE
Silver needs to hold $1052 on closing basis to prevent a retest of $980. On the higher side $1152 and $1192 are the resistance zones.
Happy Profitable Trading
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