This is a very important week for gold and silver as well as the US dollar. The US dollar gained towards the close of the previous week as there is a slight probability that the Fed might raise interest rates instead of cutting them. Gold, silver and crude oil have had a great January with an even battle between bulls and bears. Gold needs tobreak $660 this week and silver $1425 and failure to break and close over them will result in a good correction.
The Fed meeting this week will be key as Bernanke completes one year in office. For the past one year the Fed has not surprised the markets. This meeting will be the key as US growth has beaten market expectations. If the Fed signals that interest rates could rise there could be marginal correction in gold and silver.
The base metals rally has been lead by nickel as LME stocks continue to fall and fears of strike. Copper has also gained on rising Chinese imports. China’s copper imports rose 59.4% in December 2006 suggesting that industries were restocking themselves. Higher growth expectations in the developed nations (apart from China and India) will continue to support base metal prices at lower levels. As long as copper March future holds $245 there is every possibility of $300 and $330 over the coming months.
GOLD -- FEBRUARY FUTURE
Gold needs to break $660 for $690. On the lower side as long as $636 holds on closing basis the downside is limited. A consolidated fall below $636 will result in $628.
SILVER -- MARCH FUTURE
Silver needs to break $1400-$1425 for further gains. On the lower side as long as $1317 and $1305 hold on closing basis the downside is limited.
Happy Profitable Trading
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