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-- Posted Monday, 11 December 2006 | Digg This Article

GOLD	SILVER
COMEX GOLD FEBRUARY FUTURE -- $627.90	COMEX SILVER MARCH FUTURE -- $1392.00
EXPECTED TRADING RANGE
GOLD -- $618.80 -- $639.90	SILVER -- $1339 - $1435.00
COPPER AND CRUDE OIL -- EXPECTED TRADING RANGE
COPPER MARCH -- $309.60 - $319.50	NYMEX CRUDE OIL  DECEMBER - $59.90 - $63.60
GENERAL MARKET CONDITIONS
Technically gold lower close on Friday has come as a shot in the arm for gold and silver bears. Here are a few statistics. 13th May 2006 spot gold reaches a record $730.0 only to fall to $636.50 on 25th May 2006 and $542.80 on 15th June 2006. On 18th July 2006 spot gold reached a high of $676.00 due to Hezbollah and Israel war only to fall to $602.88 on 25th July, 2006 and $561.20 on 10th October 2006.  Last week spot gold rose to $649.50 only to fall thereafter. The successive higher base is getting lower for gold suggesting a bear trend. The successive lower base is also getting higher. Between $600 and $610 gold is in a neutral territory and there will tough fight bulls and bears if we see those levels in December. A weekly close below $600 should result in $537 and the bears could be in charge.   In 2006 gold and silver’s rise has been accompanied by rise in global equity markets.  This could be a bearish factor for gold and silver as whenever global equity markets collapse, gold and silver could crash (assuming other factors such as oil prices, geopolitical risk and the US dollar remain constant). Out of the total investment in gold and silver (whether physical or future), we believe nearly sixty percent is speculative and the balance fourty percent are investment related. Investors are fully invested in view long term bullishness and new investment will shift into gold and silver only when a near bottom is formed which is not the case at the moment. Speculative demand is dependent on global money supply, interest rates and quick investment opportunities. Global money supply should fall in 2007 as more and more emerging markets like India and China also raise interest rates to prevent inflation from exceeding tolerable levels. Money will not be cheap. Until and unless speculators are convinced that gold is set to create new highs over the coming weeks and months, they will be remain on the edge. To sum it up gold and silver’s short term fall is due to the over-hype that of global rebalancing of the US dollar and the subsequent hyper bullishness created in gold and silver.   The lagging effects of lower crude oil prices is showing itself on US economy’s services and manufacturing sector. These sectors should perform even better in January. The Fed will raise interest rates in May in our view and other central bank’s could follow. The US dollar’s crash will not be nuclear explosion. It’s a slow and steady process which is happening every day. If the US dollar crashes all of a sudden the global economy will move like a drunken man and there could be massacre. Even country’s growth is sensitive to the US dollar’s movement and none of the global leaders would like to see US dollar getting wiped out in a single day.   The Fed meeting will be the key this week. The Fed is expected to maintain to status quo on interest rates and not much change is expected on the interest rate policy. It’s the surprise factor that is keeping traders from going too short or too long. Crude oil prices and the US dollar will continue to dictate gold and silver. Markets are buzz with speculation that the European Central bank (ECB) had intervened on Friday and sold euro’s to prevent the currency’s gain. Traders will be looking forward for a bottom in gold and silver this week before going long this week.
GOLD -- FEBRUARY FUTURE
Gold needs to hold $617.40 to prevent a slide to $603.20 and $590.10. On the higher unless there is a daily close over $643.70 the upside will be limited. Only a consolidated break of $643.70 will result in $655.80.
SILVER -- MARCH FUTURE
Silver needs to hold $1354 to prevent further losses to $1305 and $1234. On the higher there is a strong resistance between $1415 and $1435.
Happy Profitable Trading
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prices of specific currencies, precious metals, base metals, or equity indices reflect the views
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for any losses incurred in connection with any decision made, action or inaction taken by any
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errors in, or omissions of Information.

-- Posted Monday, 11 December 2006 | Digg This Article

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