Crude oil is dictating gold and silver prices. Crude oil rose to high of $96, spot gold nearly tested $800. Crude oil fell from $96 to $92 gold fell from $799 to $784. As far as gold demand in India is concerned, wholesale gold traders are having a nightmare with estimated sales dropping twenty percent below normal during this peak Diwali season. There are more scrap sales at higher prices.Lower income and lower middle class purchaser of jewellery are only converting their old jewellery into new designs and the net addition of gold is peanuts.
Gold has fallen in US dollar terms and nothing else. In 2006 when gold reached $730 MCX near dated future rose over INR 10700. Now when gold is nearing $800 MCX December future failed to break INR 10200. Indian gold prices are nowhere near the peak. The same is with other currencies.Retail investors can never buy gold at lower prices. That’s all I can comment. How? They never purchased gold at INR 8600 expecting prices to fall to INR 8300. Even if gold prices fall to INR 9500 they will wait for INR 9000. This wait will continue endlessly and gold prices will rise slowly and steadily with successive lower base getting higher. Retail investors will purchase gold when it nears a multi month peak. They had purchased gold when prices reached INR 10400 only to see gold prices falling to INR 8600.
The problem for most of the retail investors is that most of them invest late when prices seem to reaching a medium term top and when prices fall subsequently there are unable to invest due to paucity of funds. This happens with most of us. The best way to overcome is to book partial profits on all your investments and sit on cash. My experience shows that there are at least twenty trading sessions in a year where either a short term top or a short term bottom is formed. If one is sitting on cash, he can use these days to invest. However I do not believe in the concept of averaging.
Base metals are falling everyday and more and more investors are long. There has been a sudden surge in global inventories which has resulted reduction of short term investment demand. Nickel and Lead are my favorites for the next two to three months as steel demand is expected to be robust till March. Lead will be volatile and could be vulnerable to short term losses if there is a reduction of speculative interest. Copper, if it closes lower today will result in technical breakdown.
COPPER -- DECEMBER
A close below $343 will result in $326 and $316. A close over $343 will result in $343-$360 wider trading range.
NYMEX CRUDE OIL --FUTURE
Yesterday's fall from $96 was a mere a technical correction and nothing else and crude oil will continue to find more sellers till $100 is not breached. As long as $87 holds in short term, downside will be limited.
Happy Profitable Trading
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-- Posted Friday, 2 November 2007 | Digg This Article | Source: GoldSeek.com
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