Copper, zinc and other base metals zoomed which contributed to the rise in gold, silver and crude oil. Crude oil edged past the $60 as Opec tries to cut production. Gold was also spurred by safe haven demand after the North Korean nuclear tests. Russia announced that it plans to diversify a portion of its reserves into the Japanese yen, sending all of the yen crosses lower.As a major holder of foreign exchange reserves, Russia’s decision brings the topic of reserve diversification back into play. Russia previously increased its share of euros and are now boosting its holdings of yen.Many other central banks are considering doing the same, if they have not already done so, especially as the yen trades at such cheap levels. The US dollar is showing signs of a bottom and could renew its weakness unless lagging effects of crude oil show that the US economy will maintain the current rate of growth. These are all optimistic news for gold and silver, subject to technical factors and crude oil.
Copper’s rise was partly due to short covering by traders. Comex final copper volume was estimated at 14,000 lots, nearly double that of Friday's official 6,891 lots. On the London Metal Exchange (LME), three-months tin soared to a record-breaking $11,000 a tonne, while three-month nickel and lead futures both rallied to new contract peaks. Signals of slowing demand from China, has failed to weigh on the momentum. China imported 39.6 percent less refined copper and alloy in the first nine months than in the year-ago period, official Customs figures showed yesterday. Exports jumped 232.4 percent over the same period. Copper inventory data showed LME monitored warehouse stocks rose 475 tonnes to 114,600 tonnes yesterday, while Comex stocks rose 1,008 short tons to 23,210 tons on Friday. The latest weekly Commitments of Traders data issued by the Commodity Futures Trading Commission showed the speculative short position in the market grew 8 percent in the week ended Oct. 10. Noncommercial players in copper, mostly speculators, held a net short position of 13,287 contracts as of Tuesday, up from 12,293 contracts a week earlier. The current rally in copper and base metals is more of speculative covering which if lasts could rebuild the bullish momentum not just in base metals but also in gold and silver and other precious metals. Comex December copper faces key resistance at $368.70 and a close over the same will result in $392 as the next resistance levels. Support stands at $349.60.
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 not 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.
GOLD -- DECEMBER FUTURE
A break of $603.50 will result in re test of $614.0 and $621. On the lower side $593.50 is the initial support with $586.50 as the key support.
SILVER -- DECEMBER FUTURE
Silver needs to break $1212 for $1256 and $1320, On the lower side as long as $1152 holds on closing basis the downside will be limited.
Happy Profitable Trading
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