MCX Gold June: Our support level of 8888 has been holding and as long as it holds the downside will be limited. Gold falls below 8888 then 8827 and 8776. On the higher side only a break of 9032 will result in further gains to 9076 and 9130.
MCX Silver July: Silver has been holding 18200 and needs to hold the same to preven a fall to 18000 and 17760. While a consolidated break of 18680 will result in further gains to 18800 and 19000.
MCX Copper June: 315.10 is the key intra day support. A consolidated fall below 315.60 will result in 307.30. On the higher side only a break of 327.20 will result in gains to 331.50 and 337.20.
GENERAL MARKET CONDITIONS
Studies say that Global lead and zinc markets could be in deficit this year. Lead demand all over the world will rise by 4.10% to 8.26 million tonnes while production is set to rise by 3.8 pct to 8.21 million tonnes, leaving a deficit of just over 50,000 tonnes in 2007. This would mark the fifth consecutive year the market has been in deficit. The increased rate of demand is mainly due to a further 12.40% increase in usage in China, where demand is benefiting from increased vehicle production. China also tops the production list, where output will rise 12% this year. Lead prices are currently around 35 pct higher than this time last year. Worldwide demand for zinc, which will rise 4% to 11.45 million tonnes, is expected to outstrip refined production, which will rise 7% to 11.40 million tonnes, leaving a deficit of just under 40,000 tonnes. Demand growth will be primarily driven by growth in Asia with China leading the way, expected to report an 8.40% increase in usage on the year, mainly due to "further expansion in the galvanized sheet sector. Chinese exports are expected to exceed 450,000 tonnes for the first time since 2003.We had mentioned in our earlier reports that zinc should be the best performer among the base metals which is being reflected by the fundamental side. However zinc and other base metals could fall 15% to 20% at any point of time and still maintain the bullish trend due to changes in speculative interest.
Gold and silver are firm on the back of US dollar weakness. Copper prices are consolidating at the moment before the next move. Base metals will continue to be the key driver for precious metals. Investors apprehension over rise in base metals has resulted in profit taking at higher levels. Investor caution over the rise in global equities can be reflected by movement in Dow Jones which opened more than hundred points higher but closed thirty seven points higher. Nasdaq and S&P closed in the red. A mixed performance from US stock markets. Expect volatility to rise in gold and silver unless there is a technical break out.
DAILY TRADING STRATEGY
One sell first as gold June nears $679 with a stop loss of $681. Sell silver July near $1341 with a stop loss of $1344.
Buy gold June below $668 stop loss $664 target $678.50 and $679. Buy silver june below $1314 stop loss $1306 target $1332, $1376.
GOLD -- JUNE FUTURE
Gold needs to break $677-$680 zone for $685. On the lower side $668.20 and $663.60 are the support levels.
SILVER -- JULYFUTURE
Silver needs to break $1344 for $1359 and $1374. On the lower side $1308 is the initial support with $1300 and $1286 as the other supports.
Happy Profitable Trading
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