GOLD WILL NOT BE BULLISH TILL THERE IS A CLOSE OVER $600
GENERAL MARKET CONDITIONS
Everybody is talking about commodity slide. Year on year returns in gold, silver is still positive and not negative. It’s was around this time in 2005 that gold and silver started its mystical rise. Last year investors and most of the investment guru’s were not buying/investing in gold and silver. At the moment even after the correction, we are asked everyday by investors to tell them the opportune time for long term investment in gold and silver as they do not want to miss the next rally. The general retail investor thinking in India is that gold can fall to $530 and still rise to $700 and above over the coming months. At lower levels, the risk to return ratio moves in favour of the buyer.
Today is Dhanteras in India. This marks the beginning of three day long Diwali festival in India. Retail investors should buy small quantities of physical gold every 2-3 months (if possible every month) as a part of their investment portfolio diversification, if they cannot invest in futures market Gold historically has been one the best hedge against future uncertainties and will continue to remain. Gold can be disposed off twenty fours a day, three sixty five days a year, if any financial emergency arises. Paper assets like equities or even real estate cannot be sold or mortgaged at odd hours. One should not keep all eggs in one basket and investment portfolio diversification is the key in this every changing global money market.
Crude oil futures falling to a low of $57.35 before settling at $57.65 did not result in slide of gold and silver. Gold and silver are trading in a range and most of the traders are on the sidelines waiting for a technical break out. Inflation numbers from US suggest that the Fed will continue to hold interest rates at the current levels and that lower crude prices will result in continued pause in US interest rates. Gold’s attractiveness as an inflation hedge may not there in the short term, however at lower levels long term investment demand will be there.
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 market 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
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.
Happy Diwali to Everybody
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Prepared By Chintan Karnani. Web Site:www.insigniaindia.com
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