-- Posted Wednesday, 20 December 2006 | Digg This Article

Precious Metals Market Update for 20th December, 2006
GOLD	SILVER
COMEX GOLD FEBRUARY FUTURE -- $626.20	COMEX SILVER MARCH FUTURE -- $1285.0
EXPECTED TRADING RANGE
GOLD -- $621.40 -- $637.10	SILVER -- $1229 - $1356.00
COPPER AND CRUDE OIL -- EXPECTED TRADING RANGE
COPPER MARCH -- $298.60 - $313.80	NYMEX CRUDE OIL  DECEMBER - $59.90 - $63.60
GENERAL MARKET CONDITIONS
Fund managers ducked market sentiment by selling silver this week as the markets were expecting a correction after Christmas. Gold and silver continued to be dictated by technical factors and the US dollar. Gold has not yet fallen while in silver the fund selling seems to be over with passing of each day. Gold sand silver should consolidate at the current levels with the next higher move. US producer prices suggest that the Fed is not finished with interest rate hikes. Inflationary pressures with support gold apart from weaker US dollar. However all the bullishness in gold and silver are subject to technical factors. As long as gold December holds $614.30 and silver march holds $1224 on closing basis the downside will be limited.   We all know that the current rise is due to liquidity factors and that any selling by fund managers could create turbulence in the markets. All stop losses are useless in such markets as they are bound to be hit. While making investments in any financial product one should determine his risk appetite before hand so that trailing stop losses if needed can be used to minimize losses.  Investment’s are not invincible and all investments do not result in profit, stop losses come in handy may a times. I am writing this for the Indian traders some of whom never use stop losses and exit only when they do not have margin money. There are still investors who have are long in gold MCX over INR Rs.10, 000 per ten grams and will not exit unless gold falls below INR Rs.8500 per ten grams, a similar situation is in silver.    Venezuelan leader Hugo Chavez is directing a growing share of the country's oil profits into euros as the dollar and crude prices fall. Venezuela and oil producers from the United Arab Emirates to Indonesia plan to funnel more money Euro. Banco Central de Venezuela has slashed the percentage of its $35.9 billion worth of reserves invested in dollars and gold to 80% from 95% a year ago. Venezuela has boosted its euro holdings to 15%, from less than 5% a year ago. The share of foreign-exchange deposits held in dollars by OPEC members and Russia, the largest non-OPEC oil exporter, fell to a two-year low of 65% during the second quarter, from 67% during the previous three months, Bank for International Settlements figures released last week show. Another reason why one should invest in gold on dips and go short on the US dollar on rise.   The key short term technical levels in both gold and silver have held well and should hold for the remaining few sessions in 2006. The fear of hedge fund liquidation is more or less over  and that will every fall the risk to return ratio will be in favour of the buyer.
GOLD -- FEBRUARY FUTURE
Gold needs to break $637.60 for $643.40 else it will trade in $618 - $635 range for the rest of the year. Only a daily close below $615.80 will result in further losses else the downside is limited.
SILVER -- MARCH FUTURE
Silver needs to break $1339 to targets $1400. On the lower side supports are at $1252 and $1224.
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-- Posted Wednesday, 20 December 2006 | Digg This Article

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