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-- Posted Wednesday, 10 September 2008 | Digg This Article | Source: GoldSeek.com

GENERAL MARKET CONDITIONS/FUNDAMENTAL FACTOR

The fall in commodities is due to hedge funds exiting commodities and investing in equities and treasuries. Commodities are all about alternate investment. Commodities had gained this year due to lack of alternate investment and the slide in equity markets. If equity markets rise then funds will reflow back into equities which will result in commodities falling. Its less than two months before the US presidential elections are over. The Federal reserve and other regulatory authorities in the US will try to ensure that commodity prices fall and equities rise. Whatever happened in crude oil prices and commodities and the US dollar in 2008 was politically manipulated due to the US presidential elections. The lagging of lower crude oil prices will be felt from October by way of greater consumer confidence and business confidence in US.  The Republicans will benefit from lower commodity prices and a stronger US dollar. Everything is fair in love and politics.  

We expect commodity prices to remain subdued till the US elections and thereafter rise. With every successive fall, demand for gold and silver will rise. Base metals can fall another ten percent if the slide continues.  Historically September’s fall in gold and silver prices is a buying a opportunity while November’s fall results in a bear trend.

We did a survey from jewelers from different parts of India this week. We had asked them whether gold and silver demand will fall in the “Shradh period” from next week. Over ninety percent of the respondents expected a marginal fall in gold and silver demand. Silver jewelers were more positive than gold jewelers. Note that silver is more used as a gift item in urban areas whereas in rural areas silver jewellery demand is more. Quite contrasting isn’t it.

NYMEX CRUDE OIL (1^ST CONTRACT)

$104 price target achieved. For the rest of the week only a fall below $96.30 will result in further losses to $90.20 and $88.30. Key Intra day resistance at $106.80

Disclaimer: Any opinions as to the commentary, market information, and future direction of prices of specific currencies, metals and commodities reflect the views of the individual analyst, In no event shall Insignia Consultants or its employees  have any liability for any losses incurred in connection with any decision made, action or inaction taken by any party in reliance upon the information provided in this material; or in any delays, inaccuracies, errors in, or omissions of Information. Nothing in this article is, or should be construed as, investment advice.Prepared By Chintan Karnani. Website www.insigniaconsultants.in

-- Posted Wednesday, 10 September 2008 | Digg This Article | Source: GoldSeek.com

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