Gold and silver are finding buyers at higher levels with higher investments with passing of each day and higher physical demand. Crude oil once again neared $60.00 a barrel after IEA raised its demand forecast for 2007. Apart from the weather crude oil being dictated by comments from Opec nations and IEA. The IEA forecasts are never accurate as their comments are just to create a fickle mind on the investors. Technically as well as fundamentally crude oil is bullish and the effects of lower crude oil prices in January by way of stronger global growth will be felt over the next couple of months. Commodity price inflation will not be high in 2007 due to higher base effect, it may rise due to other factors such as higher wages etc. Central bank interest rate hikes should end in the first half of 2007. Gold will soon be delinked with inflation.
Copper rose on expectation of higher global demand as Eurozone growth matches with US growth and expectations of Chinese demand.Copper is bullish till September 2007 as global growth will remain robust till then and London Metal Exchange (LME) prices can once target $7250 per tonne. The only risk to copper prices is fall in Chinese demand which seems highly unlikely at the moment. Chinese growth is slowly moving away from export led growth to domestic demand led growth.
Investors are adopting a buy on dips strategy for gold and silver but the same time there are bouts of profit taking at higher levels. This suggests investors have some doubts over the rise due to 2006 experience. Once spot gold floats over $660.00 for more than two weeks, investors will get more confident and may not book profits quickly.
COMEX GOLD -- APRIL FUTURE
Gold needs to hold $670 and $673.20 for $679.40 and $684.30. On the lower side initial support is at $663.50 and $659.80 with $656.90 as the key intra day support.
COMEX SILVER -- MARCH FUTURE
Silver needs to break $1400 for $1437 and $1458. On the lower side $1374 and $1350 are the initial support levels with $1330 as the key support.
Happy Valentine Day
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