-- Posted Wednesday, 14 January 2009 | Digg This Article
| Source: GoldSeek.com
DAILY COMEX REPORT
GENERAL MARKET CONDITIONS/FUNDAMENTAL FACTOR
I have been bullish on gold in 2009. The reasons for my bullishness include (A) Depreciation in the purchasing power of US dollar and other paper currencies (B) Alternate investment theory (C) Demand – Supply fundamentals (D) Technical factors among others. Let’s now look at the negative factors affecting gold prices in 2009. It’s important to keep in mind the bearish factors also while investing. Some of the bearish factors for gold are:
A) Inflation: Inflation is expected to fall in 2009 and some countries might experience negative inflation after the second half of the year. Gold’s demand as an inflation hedge will not be there.
B) Liquidity: Prices of any commodity are affected not just by fundamentals but also by investment demand. In fact short term price movement is mainly due to investment demand. Gold will fall as and when there is reduction in global liquidity and/or stock markets collapse.
C) Inability to break key technical resistances: The key technical resistances for 2009 are $982, $1056 and $1200. If any of these resistances are not broken over a period of time there will be sharp corrections as when gold approaches these prices. The correction could be anywhere between ten percent to twenty percent.
D) Reduction in geopolitical risk: Middle East risk premium is still there in gold prices. Gold prices could fall if there is peace in the Middle East for a sustained period of time. There are other regions in the world which is experiencing terror crimes but they have not affected gold prices so far.
TRADING BLUNDERS COMMITTED BY SOME OF THE TRADERS
Yesterday one of my clients first went long on comex silver march at $1066 in the UK session. When silver started falling after the US opened he booked loss at $1048 and went short again at $1044 and his position is open now. This kind of trading strategy is very risky and is profitable only if prices move in a single direction. When prices move both ways this kind of trading strategy is not useful and one needs to use trailing stop losses to curtail the losses. I am in favor of such kind of a trading strategy only when there is a technical break out or a technical breakdown.
TECHNICAL VIEW
COMEX GOLD FEBRUARY
Gold managed to hold the 100 day moving average of $811.30 and needs to close over the same today to prevent another round of selling to $795. On the higher side as long as gold does not break $839 and $855 upside will be limited.
DISCLOSURE: NO POSITIONS
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, 14 January 2009 | Digg This Article | Source: GoldSeek.com
