Copper and Zinc fell nearly four percent on rising London Metal Exchange (LME) inventories and concerns that demand will fall from 2006 high. Traders were going long in copper and zinc on expectations that Chinese demand will pick up as they near the Chinese New Year next month which did not happen. This resulted in liquidation of long positions. Nickel rose on supply disruptions. Lower crude oil prices will result in robust global growth in 2007. Fundamentally base metals will remain bullish. However there is liquidity overhang all over the world. In 2006 we saw that due to excess liquidity there was too much money chasing too few investment opportunities, which result in base metals and energies falling after a phase of rapid rise. The worst looser were the retail investor which buys at the peak and sells at the lowest level. Japan will not increase interest rates as retail spending does rise consistently.If the US trade deficit continues to widen and there Fed does not get enough subscribers to its treasury bonds then it will print more dollars to run the US economy thereby adding to the global liquidity. Higher global liquidity always results in boom to bust scenario for any investment. Gold and silver will never be busted as they are now being slowly considered as an alternative to the printed paper money by various central banks.
Gold and silver fell due to profit taking ahead of the Fed meeting. The US dollar still has failed to gain significantly resumption of central bank foreign exchange diversification theory. Russia reiterated their plans to diversify their reserves into the Euro, Sterling and Yen at the expense of the US dollar.Aside from Russia, there is speculation that many central banks have orders to diversify their reserves. The key short term as well as long term supports have been held by both gold and silver which will result in the bullish trend remaining intact.
GOLD -- FEBRUARY FUTURE
Gold needs to break $660 for further gains. 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 $1370-$1380 for further gains to $1425. On the lower side as long as $1317 and $1300 hold on closing basis the downside is limited. A consolidated fall below $1300 will result in $1252.
Happy Profitable Trading
Further MCX, NCDEX and Comex future Analysis can be obtained by registering to our
website www.insigniaindia.com where readers can obtain the one week analysis free and
learn about subscription details. Comments and questions are also invited via email to
1080-81, Ugger Sen Street,”Somani Bhawan”
Sita Ram Bazar, New Delhi-110006. India.
Ph: [O] 91-11-30919880 [M] 09811139549
Website: www.insigniaindia.com
Email: chintan@insigniaindia.com
The content on this site is protected
by U.S. and international copyright laws and is the property of GoldSeek.com
and/or the providers of the content under license. By "content" we mean any
information, mode of expression, or other materials and services found on GoldSeek.com.
This includes editorials, news, our writings, graphics, and any and all other
features found on the site. Please contact
us for any further information.
Live GoldSeek Visitor Map | Disclaimer
The views contained here may not represent the views of GoldSeek.com, Gold Seek LLC, its affiliates or advertisers. GoldSeek.com, Gold Seek LLC makes no representation, warranty or guarantee as to the accuracy
or completeness of the information (including news, editorials, prices, statistics,
analyses and the like) provided through its service. Any copying, reproduction
and/or redistribution of any of the documents, data, content or materials contained
on or within this website, without the express written consent of GoldSeek.com, Gold Seek LLC,
is strictly prohibited. In no event shall GoldSeek.com, Gold Seek LLC or its affiliates be
liable to any person for any decision made or action taken in reliance upon
the information provided herein.