Yesterday’s volatility was just another example of excess liquidity in the global markets. The fall in Chinese stock markets resulted in European and US stock markets falling. We had mentioned in our earlier reports that whenever global equity markets fall, gold and silver will also but the fall will be less than stock markets and the recovery will faster than the stock markets. I am surprised not yesterday’s fall, instead we were expecting the same. Unwinding of yen carry trades due to a stronger yen add to the fall in gold and silver. Crude oil has been dictating gold and silver. Crude oil march future fell to $60.05 gold April future fell to $677.10 only to rise to $692.50 when crude oil prices rose to $62.20. There has been a direct correlation between crude oil price and gold and silver prices. The US dollar is weaker but once again its re-adjustment of the yen against the euro and sterling which has prevented sharp losses for the greenback.
Fundamentals as well as technical bullishness is intact as key long term support levels have been held. It’s just the reduction of short term hot money which has resulted in the slide. Managing volatility is the key. Indian bucketer’s/Dibba traders made a lot of money due to zig-zag trade.
GOLD -- APRIL FUTURE
A close below $659.00 will result in fall to $650 and $644.50 tomorrow. On the higher side $679.80 is the initial resistance with $692.50 as the key resistance.
SILVER -- MARCH FUTURE
Silver needs to hold $1396 on closing basis to prevent a fall to $1358. On the higher side $1485- $1500 is the resistance zone and a consolidated break of the same will result in losses to $1526.
Happy Profitable Trading
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