Copper and other base metals continue to rise on greater demand by hedge funds.Base metals have outperformed precious metals from mid February till date and will continue to do so. Global economy is robust and housing demand has exceeded supplies in most part of the globe. No a single country is recession. US economy is slowing down but recession is still a long way off. If India, China and rest of Asia continue to grow firmly then US economy could shift from domestic demand led growth to export led growth on greater demand for US goods and services from Asia.This is not happening immediately, but there is a possibility over the same. As a result there is a readjustment in the value of the US dollar. The current copper rise seems to be more of a short covering than demand from China. Higher Chinese demand has been factored in by the markets. However comex copper near dated can still rise to $400 and $450 over the few months before the big slide in the third quarter. Global Incremental demand in third quarter of 2007 should be negative.
Zinc and other base metals which have underperformed copper should give better returns than copper. Zinc still remains an underperformer but should outperform rest of the base metals in 2007. Natural gas is also a good entry time for medium term traders as warmer summer will result in continued fall in inventories.
GOLD -- JUNE FUTURE
Gold targets $692 and $700 as long as $668.80 holds on closing basis. A consolidated fall below $668 will result in $660 and $653.20.
SILVER -- MAYFUTURE
Silver targets $1412 and $1437 as long as $1340 holds on closing basis. A daily close below $1340 will result in $1305 and $1284 respectively.
Happy Profitable Trading
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