On 31st March 2007, the U.S. Commerce Department, reversing more than two decades of practice, decided to levy countervailing duties to compensate for alleged Chinese subsidies to exporters. The change of policy opens the way for steel, textile and other U.S. manufacturers to apply for the same protection. The Commerce Department said Chinese paper producers benefit from government grants, tax incentives, debt forgiveness and other unfair subsidies. China's exports of coated paper more than doubled in 2006 to $224 million from their level in 2005, according to U.S. government data.
All the moves that Bush government is making aimed for 2008 US presidential elections. China growth and Chinese currency valuation is the talk among the common man in USA, which is a large vote bank. These moves should have been made a few year back. In our view the Chinese revaluation in late October, 2005, just before the 2005 US presidential vote was a key factor in getting George Bush, re-elected.
US China trade war needs to be resolved quickly in the interest of global growth. China has one of the largest foreign exchange reserves in the world and invests a large part of the same into US treasuries. US economy needs more than $2 billion a day for smooth running. Any escalation of trade tensions between US and China will result in US dollar getting bashed up.
“Protectionism is the biggest threat to globalization which could change the relationship between nations”. Gold will continue to rise due to these news.
This is a shortened trading week due to Easter vacations. Volumes will reduce in the second half of the week. Iran, interest rates and the US dollar will continue to affect intra day price movement.
GOLD -- JUNE FUTURE
Gold needs to break and close over $677.00 for further gains to $692.60. On the lower side $665.70 is the initial support with $661.10 and $653.80 as the key support.
SILVER -- MAYFUTURE
Silver needs to break $1360 and $1369 for further gains to $1397. On the lower side only a daily close below $1320 will result in further losses to $1270.
Happy Profitable Trading
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