It has happened in the early 1980’s and last week’s slide was not exception. This is what liquidity driven market can do not just to gold and silver but to any financial market. God and silver fell nearly five percent on Friday on a combination of a stronger US dollar and lower crude oil prices. Speculators were trying to force crude oil lower and the weather is supporting them with above average temperatures across US resulting in lower than expected consumption. At the moment there is a greater emphasis towards investment in equities which has resulted in outflow of short term funds from commodities into other financial instruments.
Gold, silver and other commodities are not able to attract shot term hot money due to their inability to edge higher. Nobody invests in a sellers market. However our view is to wait for a bottom and then buy. Global equity markets will also have the smack down effect in 2007 and when other alternative investment avenues fall gold, silver and other precious metals will rise. Nobody is invincible and what goes up has to come down. When equities and real estate come down commodities will rise.
GOLD -- FEBRUARY FUTURE
Gold needs to hold $594.50 to prevent a fall to $570 and $544.60. On the higher side $613.10 and $618.80 are the initial resistance with $635.10 as the key short term resistance.
SILVER -- MARCH FUTURE
Silver needs to hold $1202 to prevent a fall to $1109 ad $1019. On the higher side $1239 and $1252 are the initial resistance with $1325 as the key short term resistance.
Happy Profitable Trading
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