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-- Posted Friday, 10 November 2006 | Digg This Article

GOLD	SILVER
COMEX GOLD DECEMBER FUTURE -- $635.20	COMEX SILVER DECEMBER FUTURE -- $1308.0
EXPECTED TRADING RANGE
GOLD -- $630.00 -- $647.70	SILVER -- $1277 - $1340.00
COPPER AND CRUDE OIL -- EXPECTED TRADING RANGE
COPPER DECEMBER -- $328.00 - $343.00	NYMEX CRUDE OIL  NOVEMBER  - $57.00 - $61.72
NATIONAL COMMODITIES AND DERIVATIVES EXCHANGE (NCDEX)
GOLD DECEMBER FUTURE/10 GRAMS	SILVER DECEMBER FUTURE/KG
Rs.9182- Rs.9,360	Rs.19,000- Rs.19,800
STEEL DECEMBER FUTURE	CRUDE OIL DECEMBER FUTURE
Rs.18400.00 - Rs.19000.00	Rs.2,710 - Rs.2820
GENERAL MARKET CONDITIONS
Finally the US dollar has started to fall, crude oil prices have started to rise. Markets were filled with reports that China will diversify its foreign exchange reserve away from the US dollar. China has nearly $1 trillion foreign exchange reserves, seventy percent of which are in US dollars. If China diversifies gold and silver will zoom. I prefer to adopt a buy on dips strategy at the current levels but will prefer to book partial profits on long positions till gold does not break $668 convincingly. Volatility will only rise over the coming weeks. It will be more of a momentum play, one day gold falls only to rise the next day. Intra day traders need to be patient and have higher stop losses.     Gold has a geopolitical risk premiums attached to it. The trend is no doubt bullish in the medium term to long term. The democrats have gained a majority in US Senate. Under the regime of republicans or George Bush over the past seven years geopolitical risk globally has increased significantly. Terrorist still strike anywhere, despite high level of intelligence coordination among nations. If the there is a sustained reduction in geopolitical risk over a period of time under the democrats then gold could correct. Gold is also a hedge against inflation. Higher base effect will nullify the commodity induced inflation in 2007(unless crude oil floats over $80 in remaining 2006). Reduction in inflation will reduce inflation related demand. These are a few negative factors for gold and silver.   Higher commodity prices should result in a decline in global savings rate and simultaneously a reduction in global liquidity in 2007. The percentage of expenditure on food has increased significantly. Wheat, orange juice, soyabean and host of other agricultural commodities have increased nearly 15% over the past one year.  Global warming along with higher hedge fund interest has resulted sharp increases in food bill for the man on the street. Higher food cost affects savings as well liquidity. The part of the current price of gold includes liquidity premium and shrinkage in global liquidity will affect the pace of rise of gold and silver but not the rise.   In MCX and NCDEX gold and silver prices have not risen as much because of the continuous appreciation of the rupee over the past four months. MCX and NCDEX traders need a keep a close watch on the rupee as any weakness in the will result in prices rise even if the spot prices remain the same.
GOLD -- DECEMBER FUTURE
A close over $635.10 today will result in $657.20 and $679.90 over the coming fortnight. Initial support is at $630.0 and $626 with $618.80 as the key support.
SILVER -- DECEMBER FUTURE
Silver needs to break $1335 for $1430 and $1520. Support at $1290, $1277 with key support at $1256.
Happy Profitable Trading
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-- Posted Friday, 10 November 2006 | Digg This Article

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