Gold and silver were volatile yesterday. Precious metals are caught between greater physical demand and greater investment demand at lower levels and profit taking at higher levels. Markets are filled with speculation that the Fed will cut interest rates before the next meeting. Yesterday Goldman said that the fed may cut interest rates before the meeting. These rumors will prevent day traders from taking short positions. Fed interest rates cuts are bullish for gold, silver and precious metals. European central bank officials (ECB) are verbally trying to intervene in the currency market. We all know that ECB intervention to stem gains in the euro is in effective. All eyes are on the bank of Japan and at what price they will intervene. The Bank of Japan intervention have been very effective in the past. Excess volatility will continue in all metals for the next fortnight.
Base metals are caught between fresh investments at lower levels and recession fears. Base metals are all about investment demand. Please do not think the decline in London metal exchange demand (LME) stocks necessarily results in demand. It could also be due to hoarding by fund mangers, investors and traders thereby creating an artificial shortage and a sustained increase in prices. In fact this is happening at the moment.The end industrial user in order to protect themselves hedge in commodity exchanges which further spruces the prices.
In the US there is firing in the financial services sector and hiring in the manufacturing sector. Lehman brother yesterday announced that it will cut five percent of its work force while BMW announced that it will start a new car plant in Carolina and will hire five hundred workers. A weaker US dollar is bolstering the US manufacturing sector. Sustained manufacturing growth will lead to hiring in the financial services sector. This is a cycle which happens to every nation. However it will not erase long term bearishness for the US dollar.
GOLD -- APRIL FUTURE -- INTRA DAY PIVOT:$957.0
This is just a consolidation phase in gold. Even if gold falls to $930 it will be a technical correction and nothing else with $1000+ still in store.
NYMEX CRUDE OIL --FUTURE -- INTRA DAY PIVOT: $106.0
Crude oil holds $106 then it will target $108 and $112. Crude oil is bullish over $103.60.
HAPPY PROFITABLE TRADING
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-- Posted Tuesday, 11 March 2008 | Digg This Article | Source: GoldSeek.com
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