Gold and silver are consolidating at the moment as markets try to guage the effect of UN sanctions on Iran in the absence of other market moving news. Volume should see a marginal rise from today as most of the European markets open after Christmas. Demand should also pick up. However spot gold has been unable to break $630 while crude oil fell on lower temperatures in North East. Copper March future was consolidating in $284- $292 range.
In India physical traders are buyers under $620.00 spot gold to meet the sporadic demand. Indian need occasions to splurge as incomes rise specially among the growing youth. It started with call centres in early 1990’s to business process outsourcing to the latest knowledge process outsourcing.India has become an outsourcing hub for any activity which involves the human mind. A part of the rising incomes is spent on gold jewellery, thoughthe percentage of gold in the jewellery is falling and diamonds is increasing. In 2006 initially when gold rose to $700 there was huge scrap sales in India. Scrap sales in India will be negligible in 2007 which should increase Indian gold imports in 2007. Rising per capita income and rising population should result in higher gold demand from India over the next three to four years when the Indian economy reaches its peak. Platinum is slowly catching the fancy of the Indian youth but should not effect gold.
Crude and the US dollar will affect gold and silver. Since the key long term technical supports have been held the short term bullish trend will remain intact as we move into 2007.
GOLD -- FEBRUARY FUTURE
Gold needs to break $637.60 for $643.40 else it will trade in $621 - $637 range for the rest of the week. Only a daily close below $615.80 will result in further losses else the downside is limited.
SILVER -- MARCH FUTURE
Silver needs to break $1308 for $1339 and $1400. On the lower side supports are at $1252 and $1224. Initial support is at $1272.
Happy Profitable Trading
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