The US dollar – crude oil and precious metals relationship continues as both crude oil and precious metals fall while the US dollar gets stronger. As long as the US dollar gains the downward pressure on metals and energies will continue. I had mentioned in my earlier report that higher crude oil prices have a lagging effect which has now started trickling by way of lower consumption of crude oil and people getting more energy efficient. As this process continues crude oil demand from the US, Europe and other developed nations will fall while demand from emerging nations will continue to rise due to government subsidy.
Sustained lower crude oil prices will benefit equity markets and base metals prices only. Crude oil prices have to remain around current prices or fall over the next few weeks for global equities to rise and also base metals. Higher equity markets will increase global consumption and greater demand for base metals. Nickel prices are near production cost. Copper and platinum are expected to end the year in a deficit. One needs to look for a bottom in these and invest.
The next seven days are very crucial for all metals, energies and the US dollar. We have the US June non farm payrolls on Friday, the Fed meeting next week and two US weekly crude oil inventories.These will only increase volatility. Technically gold, silver and crude oil are bearish as they trade below the 100 day moving averages. They need to close over the 100 day moving averages on Friday to be in a bullish zone. A close below the 100 day moving averages on Friday will result in the 200 moving averages being tested.
SILVER -- SEPTEMBER FUTURE -- INTRA DAY PIVOT $1777.0
Caught between 100 day MA (1774) and 200 day MA (1663). Silver needs to break either of them for direction $1626 or $1840 as the case may be.
HAPPY PROFITABLE TRADING
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-- Posted Wednesday, 30 July 2008 | Digg This Article | Source: GoldSeek.com
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