-- Posted Thursday, 12 November 2009 | Digg This Article
| | Source: GoldSeek.com
GENERAL MARKET CONDITIONS/FUNDAMENTAL FACTOR
The rise in commodities is due to excess liquidity created by central banks which has fueled the risk appetite of investors. Banks in developed nations were surviving on disburses through credit card. The negative savings rate in the US was a result on excess expenditure by way of credit card purchases and mortgages. Now after the recession consumers in these nations have understood the meaning of savings. They are repaying their credit card loans and mortgages and are spending less through credit cards and taking up less mortgages. The Fed and the European central banks have printed unlimited amount of money. This money is sitting idle and banks and other large financial institutions have started investing gold, commodities and other risky investments ignoring the fundamentals. Banks, hedge funds and large investment companies start the rise and later retail investors join the bandwagon which results in big upward moves in a very short period. This is the current chain and will continue for the rest of 2009 unless central banks in developed nations take measures to reduce liquidity or say that they will take reduction measures in future.
Markets are filled with speculation that euro/usd will rise to 1.55 soon. The current bearish sentiment in the US dollar suggests that investors expect the euro/usd to rise 70-80 pips every day and reach 1.55 in a fortnights time. I do not expect this to happen anytime soon. Even if euro/usd reaches 1.55 there will not be any intervention by the European central bank.
The momentum is certainly bullish for gold and silver. Corrections will come as when there is profit taking.
TECHNICAL VIEW
COMEX GOLD DECEMBER
$1143.90 is the key short term resistance and this will be tested as long as $1096 and $1107 holds.
MCX ZINC NOVEMBER
97.10 is the key short term support and as long as 97.10 holds on daily closing basis there is every possibility of 108 being retested. Intra day zinc needs to break 102.20 else it will fall to 98 and 96.50.
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
For further clarifications on this report call 91-9312335649 (Mr. Chintan Karnani)
-- Posted Thursday, 12 November 2009 | Digg This Article | Source: GoldSeek.com
