It’s more of sterling story than a US dollar story for gold and silver. The price movement in the sterling affects gold and silver more than other currencies as London traders take advantage of arbitrager opportunities due to a strong pound. There are buyers on dips and investors as well as traders are not willing to accept the story of firmness in US economy in 2007. The US dollar has pared most of its last weeks gains after former Fed chairman greenspan said that the US dollar weakness is here to stay.
Volumes are going to dip as we near Christmas and New Year. Funds are now positioning themselves for 2007 which has resulted in portfolio realignment. The markets are now waiting for the Fed meeting and we not do expect the Fed to give the markets a Christmas gift by changing their stance on future interest rates. The big splash Indian marriage has started and there is demand for gold at lower levels. There are huge buying orders below spot gold $625.00 which is preventing gold from falling. Indian gold demand should rise over the coming weeks and dealers have once again started stocking gold at lower levels to meet demand. Silver will remain affected by the US dollar and gold. It should create new highs in December.
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. A consolidated break of $1435 will result in $1490 as the next target.
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