Precious metals and base metals are trading in a range as US and European markets open after a long weekend. The markets sentiment has become too negative for gold and silver especially in India. In India continued gains in the Indian rupee has resulted in widening of the parity price between Comex future and MCX future in gold, silver and copper. Copper and other base metals have become wild. One day they fall by three percent and they day they rise by the same.The kind of volatility base metals are now experiencing is excellent from short term trading but this will deter low risk long term investments.
In our view base metals can fall twenty to twenty five percent from the current levels and yet maintain the bullish trend. Indian GDP growth has yet to show the true potential. States of Uttar Pradesh, Bihar, Madhya Pradesh, Jharkand, Oriissa, Chhatisgarh, have been underperforming the national average. These states constitute more than twenty percent of the Indian land area. If growth rates in these states even reach the national average, Indian GDP growth will cross the double digit mark.The only risk is political instability and slide in global growth rates. Higher Indian growth rates could shift the base metal mantle from China to India.
This is a make or break week for gold and silver. Either gold August will fall to $631 or rise to $682 in the next fortnight. The same is with the US dollar. Crude oil prices may not see a major slide as we near the US peak summer driving season and the Gulf of Mexico hurricane season.
GOLD -- AUGUST FUTURE
A close below $653.50 today will result in $635.40 as the immediate target. On the higher side $663.50 is the initial resistance with $668 and $671.70 as the key intra day resistance.
SILVER -- JULYFUTURE
Only a consolidated break of $1308- $1314 will result in gains $1329 while failure to break the same will result in $1278 and $1236 in the near term.
Happy Profitable Trading
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