Nothing official about silver’s fall last Friday, as traditionally silver has a history of slides in the month of December and April. Historically speaking silver is the third most volatile metal after nickel and copper and that these dips have provided excellent investing opportunities once they stabilize. Gold had a technical correction which is very good for the long term bullishness. In India in MCX traders and investors used the dips to buy and there was no signs of panic on Saturdays trade unlike the fall in April and May 2006. Physical prices of gold in New Delhi was higher than MCX February future by Rs.50/ten grams on Saturday. Physical traders will be using the dip to restock themselves. Demand will be there.
The key short term technical levels in both gold and silver have held well and should hold for the remaining few sessions in 2006. Volumes will dips as the week progresses and the market needs news for direction till then it will be a technical trade. We had mentioned in our last Mondays report that spot gold between $600-$610 is neutral zone and we will continue with this view this week. The US dollar and crude oil prices will impact gold and silver this week too.
GOLD -- FEBRUARY FUTURE
Gold needs to hold $617.40 to prevent a slide to $603.20 On the higher side unless there is a daily close over $637.40 the upside will be limited. Only a consolidated break of $637.40 will result in $643.80.
SILVER -- MARCH FUTURE
Silver has a strong support at $1252 and as long it holds on closing basis there every possibility of $1437.
Happy Profitable Trading
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