7/7 is a historical day for gold as well. Gold August future rose to $430.10 only to fall to $418.10 on 15th July, 2005. Thereafter gold rose more than $200 to $732 on 12th May, 2006. Gold has been in secular bull run. There are calls that gold’s bull run will start to fade out towards the close of the year of in 2008. The reason shrinkage in global liquidity and higher bond yields in 2008. We disagree with the view. As long as spot gold holds $538, gold will continue to remain in a long term bull phase. Bonds yields will rise in 2008 as global interest rates should rise in the first six months of 2008 only to be cut in the next six months. Between July 2008 and December 2009, most of the countries in the world will be facing general elections including India, Russia and USA. Uncertainty will be there on whether the new global leaders will emerge or the current scumbags need to be tolerated. Gold and only gold will benefit due to the same. There will be even greater volatility which bulls as well bears will find it hard to cope.The only risk to gold prices is boom to bust Chinese economy, which seems highly unlikely at the moment
It’s the same old story for precious metals, US dollar weakness, stronger energy prices and base metal prices is preventing gold and silver from a correction. Increased terror threats in UK as we near 7/7 has resulted in safe haven demand. Volatility will rise ahead of the bank of England meeting ands the European central bank meeting (ECB)today and the US June payroll numbers tomorrow. I just hope that the Bank of England does not surprise.
GOLD -- AUGUST FUTURE
Gold needs to break and hold $661 for $665.50 and $669.30. On the lower side as long as $646.70 holds on closing basis, downside is limited. Initial support is at $653.50.
NYMEX CRUDE OIL -- JULY FUTURE
Crude oil needs to break $71.25 for $73.67. On the lower side $69.76 is the initial support with $66.80 as the key support.
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