Diwali is on the weekend and Indian manufacturers, retailers as well as investors are having on the best Diwali’s in recent years. Gold jewellery demand from India has beaten all expectations courtesy ever rising Indian stock markets and higher disposable income. The rise in gold prices has had a negligible effect on gold demand from India. Gold December future rose to a high of $594.90 while silver December future rose to a high of $1175 in early asian trade. The US dollar has gained and so has gold, an indication of gradual de-linkage between the US dollar and gold prices. Crude oil prices are once again nearing the $60 mark and if winters arrive early in northern hemisphere, crude oil may well have bottomed out.
I am bullish on gold and silver, but technical factors suggest that I remain cautiously optimistic on gold and silver. Spot gold can rise to $614 and yet maintain the short term bearishness if it does edge past $614. Silver, as usual will continue to outperform gold on an annualized basis and is the best long term investment even at the current levels.
Geopolitical risk so far has had a negligible effect on gold and silver prices. Trade sanctions have been imposed on North Korea. US is pressing for sanctions against Iran and if it is successful over the coming weeks gold and silver may remain firm, all depending on crude oil. There are economic numbers from US this week which will decide whether the Fed will pause on interest rates or cut interest rates. Any hints of a pause is gold supportive.
GOLD -- DECEMBER FUTURE
A break of $600.50 will result in re test of $614.0 and $621. On the lower side $586.50 is the initial support with $573.20 as the key short term support.
SILVER -- DECEMBER FUTURE
Silver needs to break and hold $1192 and $1212 for $1256. On the lower side $1152 in the initial support with intermediate supports at $1137, $1124 and key support at $1105.
Happy Profitable Trading
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