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-- Posted Thursday, 22 February 2007 | Digg This Article

GOLD	SILVER
COMEX GOLD APRIL FUTURE -- $682.10	COMEX SILVER MARCH FUTURE -- $1423.50
EXPECTED TRADING RANGE
GOLD -- $669.00 -- $698.00	SILVER -- $1374.0 - $1502.00
COPPER AND CRUDE OIL -- EXPECTED TRADING RANGE
COPPER MARCH -- $260.40 - $277.00	NYMEX CRUDE OIL  MARCH   - $59.20 - $62.80
GENERAL MARKET CONDITIONS
Gold and silver fell yesterday in Asian trade after bank of Japan raised interest rates due to unwinding of carry trades. They rose in London PM trade on high physical demand. The interest rate uncertainty is over as far as the central banks of developed nations are concerned.  European Central Bank (ECB) and the Bank of England (BoE) are expected to raise interest rates once before June 2007.  There is less than twenty percent chance that the Fed will raise interest rates in May. Bank of Japan is not expected to raise interest rates. There is an element of certainty on global interest rates. Carry trades flourish in a certain environment. Carry traders can take gold, silver or any commodity to any level.  Gold and silver were delinked from the US dollar yesterday and will continue to be delinked as 2007 progresses.    We expect the Bank of Japan to repeat what they did back in July of 2006, which is to give the market at least four to six months to absorb the latest rate increase before tightening policy again.  As an export dependent nation, Japan does not want to see a rapidly appreciating Yen and they especially do not want to trigger massive carry trade liquidation.  At 0.50% , Japan still offers the lowest yield in the developed world, which is keeping the Yen an attractive funding currency for carry trades.    Most of the G7 nations are export dependent. Central bankers are succumbing to political pressure to maintain high growth rates by printing more money and keep interest rates at historically low levels.  Foreign exchange manipulation and lower interest rates are a medium term effective tool for higher growth rates. However these could lead to a boom to bust scenario. The growth rates may not get busted in 2007, it may get busted in 2009 or 2010 when India and China slow down. Whenever growth falls, the crash in commodity prices (excluding gold) will eat up everybody. Gold cannot be printed. Investor are moving from paper assets to hard assets, whether its gold or real estate or any other investment.   The momentum is certainty bullish for gold, silver and commodities. 2006 highs should be either tested and breached over the next four to five weeks in gold and silver. However a world of caution for investors. If gold can rise $26 from the lows in one trading session, it can also fall from the highs. If one is caught on the wrong footing, stop losses are useless as they may not get triggered. It’s better to exit at market rates to minimize losses.  Iranian risk will prevent gold and silver from a major slide in the short term.
GOLD -- APRIL FUTURE
Gold targets $698.50 and $715.20 as long as $671.50 holds on closing basis. On the lower side $663.50 is the key support
SILVER -- MARCH FUTURE
Silver targets $1499 and $1540 as long as $1405 holds on closing basis. On the lower side $1374 is the key support.
Happy Profitable Trading
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errors in, or omissions of Information.

-- Posted Thursday, 22 February 2007 | Digg This Article

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