Failure of gold to edge past the 200 day MA at $600.00 resulted in technical selling, silver copper and other base metals also fell after short covering demand was over. Everybody is waiting fore gold to edge past $600 before going long. More and more short positions are being created $600 while short positions below $580 is yet to be squared off. The US dollar is trying to find a short term top. A slowdown in US economy will affect Eurozone and well as Japanese economy which is preventing a major slide in the US dollar. Crude oil prices are trading $59-$61 mark. Crude oil has a strong support at $57.50.
Traders are confused whether to go long or short at the current levels. Gold has not been able to edge past $600 and simultaneously it is holding $570.Demand is there at lower levels both for gold and silver. Unless a clear direction is established, gold and silver will not be able to attract short term hot money. Silver is steady and is less volatile. Silver should start its historical volatility soon.
I am still bullish on gold and silver on a twelve month period. However volatility will increase today as well as over the coming weeks. This is not a markets for $2-$3 trading, average volatility in gold has been over $10 in 2006 and day traders should trade in this range and prevent stop losses from being hit.
GOLD -- DECEMBER FUTURE
Gold has an initial support at $586.50 and $576.30 with $563.20 as the key short term support. On the higher side $599.20 is initial resistance with $605.80 as the key short term resistance.
SILVER -- DECEMBER FUTURE
Silver needs to break $1199 for $1220 and $1292. On the lower side $1157 and $1137 are the initial support levels with $1105 as the key short term support.
Happy Profitable Trading
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