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-- Posted Tuesday, 27 February 2007 | Digg This Article

GOLD	SILVER
COMEX GOLD APRIL FUTURE -- $688.80	COMEX SILVER MAY FUTURE -- $1483.00
EXPECTED TRADING RANGE
GOLD -- $683.00 -- $703.00	SILVER -- $1458.0 - $1532.00
COPPER AND CRUDE OIL -- EXPECTED TRADING RANGE
COPPER MAY  -- $278.20.00 - $294.60	NYMEX CRUDE OIL  MARCH   - $60.50 - $63.80
GENERAL MARKET CONDITIONS
Apart from precious metals, base metals have started rising over the past one week. Nickel hit a new record high on supply worries, lead scored a new peak, aluminum hit its best since last May and copper was firm on Asian demand.   3 month Nickel for delivery on the London Metal Exchange (LME) closed kerb trading at $41,300 after earlier trading up to $41,500. Strong demand from stainless steel mills, supply disruptions and project delays have boosted nickel prices, which have climbed nearly 70% since January 2006. Nickel inventories in LME warehouses stand at around 3,500 tonnes. But only about 1,880, around half a day's global consumption, are available to the market. Nickel prices will remain firm over the next twelve to eighteen months as global steel demand continues to rise.   Aluminium hit $2,905, the highest since May 18, 2006 but below its record high of $3,310. Technical break out further supported Aluminum prices with $3000 a possibility over the coming days. Traders have helped the price rise by buying aluminium futures to hedge the options they've sold. The existence of more than 9,100 outstanding contracts, more than 200,000 tonnes, to buy 3 month aluminium at $3,000 a tonne is likely to create more volatility in the run up to next week, when the contracts expire.   Copper has gained from than 17% from the lows on expectations of higher Chinese demand, apart from a technical break out and short covering. Copper will be higher but we do not expect February lows to be tested over the next two to three months. Copper will get competition from Aluminum as copper is being replaced by Aluminum in certain industries like electricity wires due to high copper prices.   Lead hit a new contract high of $1,955 a tonne. Falling lead stocks at around 31,900 tonnes from around 117,000 tonnes in June 2006, helped boost sentiment. Production problems in Australia resulting in the declaration of force majeure at a British refinery have encouraged speculative interest in the metal.   One common feature among the base metals that are creating historical records with passing of each day is that these metals have less variety and are easy to store. There is a speculative premium attached to the prices in these base metals. Copper does not have much variety and is not prone to corrosion or storage losses. Whereas steel has a large number of variety and is prone of storage losses. Therefore there is less hedge fund interest in steel and more in copper. Whenever there is change in investment interest, volatility in these metals will also rise. Short term investment in base metals will give excellent returns. However we prefer for investment in gold and silver for the medium term as well as long term investor considering the risk to reward ratio.   Gold and silver are trading with a firm bias and as long as the key technical support levels are held, the firm trend will continue as we move into March. Silver March future expiry will add to volatility in silver prices.
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-- Posted Tuesday, 27 February 2007 | Digg This Article

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