Global investment market are liquidity driven and bulls are unaffected by any form of news. There is a difference between 2006 and 2007 as far as the global investment scenario is concerned. In 2006 equity markets started to fall around this time as Fed was nearing its interest rates hikes. In 2007, markets have priced an interest rate cut than an interest rate hike. More and more countries are reducing their tax on foreign investment to attract foreign flows which also aids liquidity. Chinese economy remains resilient to cooling measures taken by Chinese authority. Crude oil prices are off the lows and that headline inflation numbers in most of the countries will fall due to higher base effect which will result in interest rates topping out in non US countries. Investment markets are unaffected by geopolitical risk. Globally there is a more peace than a year ago, although risk still loom at large. In 2006 and 2006 around June markets were expecting more US dollar weakness which did not happen in 2006 and is happening in 2007. The result of US dollar weakness is record volumes in carry trade market, never witnessed in history. Whether history repeats itself and global stock markets and precious metals fall in June to August period remains to be seen. But average price of precious metals is getting higher and also the average volatility which is a good signal to maintain the long term bullishness, In 2006 June spot gold fell below $550 which may not happen 2007. The lows are getting higher in gold and silver. Base metals for the remaining seven months will be dependent in demand supply economics and liquidity (apart from China).
Gold, silver and metals were supported by record close of US equity markets as they overcame China. There is nothing new to comment on precious metals or base metals. The next two days will set the direction for June. US dollar is firm and the next two days will test the strength. Any weakness in US dollar will positively affect precious metals. Silver is firm and a close around the current levels tomorrow will result further gains next week.
GOLD -- AUGUST FUTURE
Gold needs to break $663.00 for $668.50 and $677.50. On the lower side a consolidated fall below $657.50 will result in $653.50.
SILVER -- JULYFUTURE
Silver needs to hold $1308 - $1312 for $1332 and 1354.A consolidated fall below $1304 will result in $1292 and $1277.
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