-- Posted Friday, 5 February 2010 | Digg This Article
| | Source: GoldSeek.com
GENERAL MARKET CONDITIONS/FUNDAMENTAL FACTOR
Every news was laid aside as investors focused on potential sovereign debt default by Greece, Portugal and Spain. As result there was panic and pay mayhem in all commodities and sell off across all sectors. Gold fell to three-month lows after suffering its worst one-day loss since 2008. Crude oil slumped 5 percent and gold had its steepest drop since 2008 after the surging dollar hurt demand for most raw materials priced in the currency. The dollar rose to a seven-month high against the euro on growing concerns over the fiscal health of debt-laden euro zone countries. But the stronger dollar was not the only reason for the sell-off. Rising U.S. unemployment claims were also cited, along with market talk that a hedge fund had dumped a big oil position that sparked the sell-off in crude.
More than 496 million barrels worth of front-month crude oil contracts on the New York Mercantile Exchange changed hands
-- representing enough oil to meet global demand for six days
-- as volumes spiked in afternoon trade, Reuters data showed.
Our View on Sovereign Debt defaults
In my view commodities have fallen on liquidity factors as investors prefer to sit on cash. Euro as a currency as an alternate to the US dollar is now virtually over. Unless the European monetary authorities clarify in blank and white over the state of the fiscal health of their countries euro will find it hard to rise in a big way in 2010. The damage to euro as a currency has been done. Investors and central banks will be in a dilemma as to which currency they should keep their investment in the longer term. The US economy also has its own set of economic woes and fiscal woes.
Gold and only gold will be the currency of the future among central bankers. Those who believe that gold is the next bubble will be wrong. In the past decade gold prices have risen from around $250 an ounce to $1225 an ounce and even there are corrections of thirty percent from the highs I will not be amazed and will not write off gold as they are a part and parcel of a very long term bull rally. The only concern for me will be the pace of the rise and not the rise as gold prices over the coming years will be investment driven and not on fundamentals.
NYMEX CRUDE OIL (1ST CONTRACT)
Bullish over $70.33 with $75.20 and $78.65 as price target
Bearish below $69.50 with $65.50 and $63.20 as price target
Neutral Zone between $69.50 and $70.33
200 day MA at $70.33 is the key support and crude oil needs to trade over the same to target $75-$79. A close below $70.33 today can result in $66.50 and $63.50 in the short term.
DISCLOSURE: NO POSITIONS
THIS IS JUST A EXCERPT OF THE MAIN REPORT
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)
Yahoo chat: chintan342@yahoo.co.in
You can also mail your queries at chintan@insigniaindia.com
-- Posted Friday, 5 February 2010 | Digg This Article | Source: GoldSeek.com
