Today is the last trading day of 2006 and gold, silver and other precious and base metals have provided an excellent year on year return. Gold future has given a return of 12.90% in 2006 (if one invested on 4th January 2006).Silver future out performed gold as it gave a return of 36.27% in 2006. Gold did not rise due to central bank buying selling which will be negligent in 2007 and gold should give a return of between 20% and to 25% in 2007. Silver has outperformed gold by miles but the high volatility factor associated with it justifies the return. Silver should give a return of 30% to 35% in 2007. Copper has been the star performer in 2006 as it future’s rose 66.10% so far in 2006 (despite the December bashing). I will be very happy if copper is able to deliver a return of over 30% in 2007. Energies disappointed in 2006 due to the hype created by Katrina and Rita. Energies should give a decent return of over 15% in 2007 but the performance of energies will be dependent on technological factors as well.
There has been huge fund investment in agricultural commodities in 2006 with record fund investment in this sector. Ever rising population, changing global weather patterns, continuous decrease in forest land are reducing production. Australia had one of the severest drought in history. Farmers are also rotating their crops based on their prices. Wheat, corn, soybean among others had all risen sharply in 2006. In 2007 there will be even more money pouring into crop speculation.
It’s a long weekend and traders are either going to square off of go long due to geopolitical risk factors. Crude oil as well the US dollar will continue to impact intra day movement of gold and silver.
GOLD -- FEBRUARY FUTURE
Gold needs to break and hold $637.60 for $643.40. On the lower side $628.50 and $618.80 are the support levels.
SILVER -- MARCH FUTURE
Silver needs to break $1308 for $1339 and $1400. On the lower side supports are at $1252 and $1224. Initial supports are at $1294, $1282, $1272 respectively.
Wish Every body a Happy New Year and Highly Profitable 2007
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