It’s once again a combination of crude oil, the US dollar and technical trading that is driving gold, silver and the metals market. Silver and crude oil recovered very quickly on technical buying yesterday which has supported gold also. Silver December future fell to a low of $1137 before settling at $1185.00. Crude oil December future continues to float over key support level of $59.00.
Crude oil prices depend on the Opec. Opec’s decision to control output has not resulted in a major spike in crude oil prices. If however there are reports of any increase in demand or fall in US inventories then crude oil as well as gold and silver will rise in the short term. Foreign markets are trading in a very narrow range for the past few months and the US dollar has defied expectations of weakness and is stronger. Hedge funds are short on the US dollar and any major gains in the US dollar could result unwinding of short US dollar positions which will negatively affect gold and silver in the short term.Volatility will rise in gold till there is a short term technical break out. Long term bullishness remains intact for gold as well as silver.
Risks are growing that China will inundate Asia with cheap steel supplies, depressing prices and hurting profits at Japanese and other Asian steel makers. A potential U.S. ban on Chinese steel imports is spurring immediate concerns. China's brisk exports to the U.S. have so far absorbed massive surplus in its Chinese domestic steel supplies. But rising production in Europe, a slowdown in U.S. demand from the construction sector and a potential dumping charge against Chinese mills could change the whole picture. If US slapped anti-dumping duties on Chinese steel or ban imports from China, it would lead to a surge in Chinese supplies in southeast Asia and in China itself, dragging down steel prices across the region. Any fall in steel prices will effect nickel prices and could move into silver and copper.
We are receiving questions by everyone including speculators and investors when to invest in gold and silver so that the next rally is not missed. But most of these investors are not willing to take a risk of fifteen to twenty percent for their investment in gold, silver and commodities in general. Investors in India can buy junk shares where can the value can be zero and still maintain calm, but they will panic on any fall of $15 in gold. There is only one thing I can write, the value of gold will never be zero. If one is hesitant in investing in future, one can invest in physical market which is as liquid as the futures.
Comex trading is pit trading in US session. As a result of this a large chunk of Comex trading volumes is moving into CBOT from India. According to our estimates nearly thirty percent of Comex future trading in gold and silver has moved into CBOT. If this trend continues, comex future will not be the global standard for gold, silver, copper and crude oil trading in the coming years.
GOLD -- DECEMBER FUTURE
Gold is trading in wider $570 - $603 range and needs to be break and close over them further direction. Initial resistance is seen at $599 and $605.20. Support at $582.20 and $577.50 with $569.40 as the key medium term support.
SILVER -- DECEMBER FUTURE
Silver needs to break $1220 for $1290. On the lower side $1157 is the key weekly support with $1122 as the key short term support.
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