Global readjustment of the US dollar and doubts that the US economy could be headed towards a recession has resulted in investors switching into gold. The current weakness in the US dollar has resulted in exporters of different nations switching their billings into currencies other than the US dollar as their currencies continue to appreciate against the US dollar. Non US exporters are twice bitten thrice shy as their profits gets eroded due to a stronger currency. Exporters, central banks and other traders and investors are switching away from the US dollar. This is a slow and gradual process which will pick up pace as the US dollar continues to collapse against the major currencies. Gold and only precious metals will be the beneficiary.
Crude oil prices are floating over $80 a barrel even without a hurricane. Most o the crude oil is billed in US dollars. The US dollar has fallen like a pack of cards. The real receivable for oil producing nations has fallen despite rise in crude oil prices. Crude oil producing countries would not like lower prices. Crude oil demand will not fall. Countries like India, China etc where prices are state controlled have not raised crude oil prices. In fact, Indians are paying prices at $67.0 a barrel. How can crude oil demand fall. If demand cannot fall, crude oil will continue to attract investor interest. A US economic slowdown does not mean global crude oil demand will fall. Crude oil has a thirty percent to fourty percent speculative interest. As and when there is reduction in investment demand crude oil will fall. Crude oil can rise to $86 and $94 and yet fall to $69 in October to December. I did rather buy some puts as a hedge or wait for a top and go short. Higher crude oil prices will support gold prices.
Three more trading sessions (including today) for the third quarter finish. Base metals were volatile. Lead and copper were the best performers while nickel and zinc were the laggards. Silver has disappointed so far in 2007. It should have outperformed all the metals. Silver, copper and crude oil have provided the safest investment for the low risk commodity investor. Gold and other base metals have been more volatile. Hopefully, silver, nickel and zinc will catch up in the final quarter.
There is nothing new comment on precious metals. As long as the US dollar continues to weaken and crude oil prices remain firm, precious metals will rise. For gold to fall the US dollar should gain and crude oil prices should fall simultaneously. If either of them move in opposite direction gold will be volatile.
MCX -- ZINC SEPTEMBER FUTURE (PRICES IN INDIAN RUPEE'S)
SUPPORT
RESISTANCE
S1
S2
S3
S4
R1
R2
R3
R4
109.30
111.60
113.20
115.30
119.00
121.00
122.90
124.00
MCX -- ZINC SEPTEMBER FUTURE (PRICES IN INDIAN RUPEE'S)
Zinc needs to hold 120 and break 124.75 for gains. It will be voaltile for the rest of the week. Bears will try ensure they zinc does not rise so that long get squared off.
SILVER -- DECEMBER FUTURE
Silver needs to hold $1346 to prevent further losses to $1324. On the higher side $1388 is the initial resistance with $1440 as the key short term resistance.
COPPER -- DECEMBER
Copper targets $365 and $370 as long s it floats over $343.0, falls below $343 then $332 and $322.
NYMEX CRUDE OIL --FUTURE
Crude oil targets $86 as long as it floats over $80.0. Key Support at 77.60
Happy Profitable Trading
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